Business Irish

Monday 22 January 2018

Greek bond yields close to 10pc amid bailout targets row

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt

Eleni Chrepa

Greece's two-year bond yields neared 10pc as a quarrel between the nation's creditors over its fiscal targets boosted concerns it is running out of time to complete yet another review of its bailout program before Europe gears up for a busy election season beginning in March.

Yields on Greece's notes due in 2019 rose by 84 basis points to 9.77pc as of 3:10pm in Athens - their highest since September.

The notes were sold in April 2014 as part of a series of flagship sales that marked Greece's brief return from market exile.

Greece won't meet fiscal surplus targets set by its euro-area creditors, the International Monetary Fund said on Monday, after executive directors met to discuss the fund's annual assessment of the nation's economy.

The IMF's assumptions aren't based in reality and don't take into account the reform of Greece's public finances, according to a European Union official who spoke on condition of anonymity because the discussions are sensitive.

The impasse is the latest in a long line of disputes that have buffeted Greek securities since the nation regained market access. While the nation's bonds trade with thin volumes and have a largely specialised investor base, flare-ups in its debt talks have previously spilled into other markets, spurring increased volatility.

The yield on the 2019 notes, which was below 4pc in 2014, climbed to as much as 37pc in 2015, when failed negotiations led to a referendum that threatened Greece's position in the euro-area.

"It all hinges on talks with creditors, which is typically a very difficult type of risk to price for investors," Antoine Bouvet of Mizuho said. (Bloomberg)

Irish Independent

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