Greece’s cost of borrowing has risen sharply this week thanks to a return to political uncertainty and fears that next year’s draft budget will not be approved by the country’s international creditors.
While nowhere near the dizzyingly high levels that sent the country to ask for an international bailout in 2010, yields on 10-year sovereign Greek debt hit 6.284 percent on Wednesday—the highest level since August 13. Yields remained elevated on Thursday at 6.123 percent. According to Bank of America Merrill Lynch, Greek bonds have gained around 44 percent over the last year, making them the top performer out of all global equity and bond classes.
In addition, spreads on Greek five-year credit default swaps (CDS) continued widening, suggesting a fall in perceptions of the country’s credit worthiness. On Wednesday, spreads widened by 15 basis points or 3.2 percent, making Greek CDS one of the day’s weakest sovereign performers, according to Markit.
Investors are concerned that politicians will fail to agree on a new president to replace Karolos Papoulias in March. This could trigger early elections—a regular occurrence in Greece—and cause the current coalition government to collapse.
via CNBC
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.