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Greek bond rally at record-breaking pace over last month

Featured Greek bond rally at record-breaking pace over last month

The yield for Greece’s 10-year bond dropped to as low as 2.03 percent, posting a record-breaking spiral of nearly 90 basis points only within the last month.

The same product hovered at 4.3 percent at the beginning of the year, meaning that it shed roughly 230 basis points.

What transpired in the meantime were two successful bond issues, a message by European creditors that Greece is meeting agreed to reforms – regardless of whatever delays – and international uncertainty over trade wars, threats of tariffs and regional conflicts, all of which rendered sovereign suddenly much more attractive. In Greece’s case, the 2+ yield looms at significantly more eye-catching than the zero or even negative yields offered by major Eurozone economies.

The biggest boost, however, came with the sudden declaration of snap elections in Greece – set for Sunday, July 7 – by PM Alexis Tsipras on the evening of his leftist party’s second-place showing in the May 29 European Parliament election.

The expectation, by investors and markets, is that an election victory and subsequent government under New Democracy (ND) leader Kyriakos Mitsotakis will attract more investments and boost growth.