Friday 23 February 2018

Investors buy up Irish and Greek bonds

Anchalee Worrachate

INVESTORS have been net buyers for the past three weeks of government bonds issued by Ireland, Greece and other so-called peripheral EU nations with large budget deficits, Citigroup bank said.

Investors also turned net sellers of benchmark German bonds for the first time in weeks, according to Citigroup data based on trading flows through the bank.

EU finance ministers will discuss next week whether any Greek rescue should be funded by issuing EU bonds guaranteed by euro-region governments, according to sources.

The difference between the yield investors demand to hold 10-year Greek bonds over similar- maturity German debt has narrowed to 3.05pc since jumping to 3.65pc at the end of January.

"The mood seems to have improved following relatively good news, such as political support for Greece," said Robert Crossley, a fixed-income strategist at Citigroup in London.

"We feel such optimism is unwarranted in the medium term, but short term there is no fighting the market."

The spread between Portuguese and benchmark German bunds has contracted by 0.15pc since concern about Greece was at its most pronounced in January.

Portugal sold more bonds than initially planned and at lower yields on March 10, even after Fitch ratings agency said it may cut the nation's credit ranking unless it steps up measures to strengthen its finances.

Greek Prime Minister George Papandreou last week announced a plan to reduce Europe's biggest deficit by an additional €4.8bn.

The nation may get a €55bn bailout from the EU, the Greek 'Kurier' newspaper reported. (Bloomberg)

Irish Independent

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