Big Comeback For Greek Bonds

The Big Greek Rally seems underway, at least among investors and speculators, as the 10-year yield fell to a four-year-low of 6.19 percent on April 2.

The Big Greek Rally seems underway, at least among investors and speculators, as the 10-year yield fell to a four-year-low of 6.19 percent on April 2, its best performance since Greece in 2010 was forced to seek the first of two bailouts with its economy on the edge of collapse because of decades of wild government overspending.

That came a day after Eurozone finance chiefs meeting in Athens agreed to disburse a long-delayed 8.3 billion euro installment in three parts after the government rammed a contentious reform bill through Parliament after negotiating a deal with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which is putting up 240 billion euros in two rescue packages.

That also propelled the Athens Stock Exchange to near a three-year high and trimming the 10-year bond yield, which moves inversely to prices, by 1.5 percent. The drop in interest rates for Greece to borrow increases the likelihood the the government will return to the markets in the next few months as Finance Minister Yannis Stournaras announced.

The Eurozone also okayed a plan by the government to shift cash between government agencies even as the major opposition Coalition of the Radical Left (SYRIZA) charged that Prime Minister Antonis Samaras, the New Democracy Conservative leader and his coalition partner, the PASOK Socialists, were disguising the true state of the economy and as the Leftists predicted more austerity would be coming.

Stournaras said he believed Greece could issue three or five-year bonds in the first half of the year, and noted Athens’ larger-than-expected primary budget surplus would also fill the gap. The deal could come after May’s European elections.

But Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurozone, said the question of whether another bailout was needed would be addressed before the end of the year, after Greece seeks debt relief from the Troika.