Greek state bond prices rose significantly, with the 10-year bond yield falling to new historic lows in the domestic electronic secondary bond market on Monday.
The 10-year yield fell to 1.137 pct from 1.31 pct on Friday, with the five-year bond yield falling to 0.32 pct from 0.43 pct, respectively. Traders attributed this development to a decision by Fitch on Friday to upgrade the country's credit rating by one notch to BB from BB- and the country's credit rating outlook to positive from stable. This development faciliates the country's new return to international capital markets with a 15-year bond issue.
Fitch analysts take it for granted that the Greek government will renegotiate a fiscal target from 2021 onwards as part of an agreed process with European institutions, which will be based on the country's fiscal and growth performance and the implementation of reforms. A reduction of targets by one percentage point of GDP could give a significant boost to the economy. They also envisage that the general government's debt will fall to 161 pct of GDP by 2021 from 181.2 pct of GDP in 2018.