The scenarios of Greece returning to the markets are thickening, due to the large decline in Greek bond yields, a result of the European rally. The Public Debt Management Agency is, according to information, ready to… step out to the markets at any time.
Preliminary work has been taking place since last April, when those scenarios were buried after the yields’ upward trend, as a result of a series of unilateral actions by the Greek government, with regard to handouts and backing down on reforms. Since then, and especially after the European elections, Greek bond yields have recorded one record low after another, and at this point the market expects immediate issuance of even a fifteen-year bond.
But the window of opportunity has opened. Yesterday, in the ten-year bonds -PDMA average yield of 2% to 2.08% – the “speedometer” even recorded a number of 1.99%. In the five-year bonds, 1% yield breaks (average yesterday’s yield of 1.03%) recorded a drop of 257 basis points compared to one year ago. The de-escalation rate’s acceleration during the last few weeks, especially after the European elections’ results, is indeed impressive. On May 24, on the eve of the European elections, the five-year bond yielded at 2.04%, with an annual decline of 156 units. Practically, in less than a month and a half, the Greek Government’s borrowing costs in the five-year bonds have been halved, from 2.04% to 1.03%.
The same applies to the treasury bills auctions. On the June 5, the Public Debt Management Agency borrowed 1,625 billion euros at a 0,41% interest rate on behalf of the Greek government, while 1,625 billion euros were raised yesterday at the corresponding auction, but with the interest rate shrinking to 0,23%.
The immediate de-escalation in the Greek Government’s borrowing cost facilitates the negotiations announced by both the Government and the main opposition, concerning the reduction of primary surplus targets, as it is something that affects the public debt’s sustainability calculations./ibna