Greek 10-Year Bond Yields Exceed 10%

For the first time in 15 months, Greek 10-year government bond yields are back above 10 percent.

The rate on the securities climbed to 10.61 percent today as investors abandoned the bonds in the run-up to a Jan. 25 election that Prime Minister Antonis Samaras said will determine Greece’s euro membership. Greek stocks also fell, posting the biggest decline among 18 western-European markets. The main opposition and anti-austerity party Syriza has a three-point lead over Samaras’s New Democracy party, according to an Alco poll today for the To Pontiki newspaper.

The double-digit yield is reminiscent of the euro region’s debt crisis. In 2012, Greece’s 10-year rates climbed as high as 44.21 percent before the nation held the biggest reorganization of sovereign debt in history.

“Investors seem to be very wary of trying to catch a falling knife,” said Michael Leister, senior strategist at Commerzbank AG in Frankfurt. “The news flow remains very much in flux. This looks likely to continue so we get another two or three weeks of volatility and pressure on Greek bonds.”

Ten-year yields increased 86 basis points, or 0.86 percentage point, to 10.61 percent at 4:35 p.m. London time. The 2 percent bond due in February 2024 fell 3.675, or 36.75 euros per 1,000-euro ($1,184) face amount, to 58.795. The nation’s three-year rate jumped 147 basis points to 15.53 percent.

Debt Sale

Greece sold 1.625 billion euros of 26-week Treasury bills with a uniform yield of 2.3 percent, up from 2.15 percent in December. Investors bid for 1.58 times the securities sold, down from 1.81 times last month.

The ASE Index of stocks fell 1.5 percent its lowest level on a closing basis since November 2012. With a 29 percent slump, the ASE posted the world’s worst performance among equity indexes after Russia last year.

Any political turmoil in Greece following this month’s election is no longer a threat to the wider stability of the euro area, Michael Fuchs, a senior lawmaker from Chancellor Angela Merkel’s party, said today.

“The situation in Europe has changed very much” since the height of the region’s debt crisis, Fuchs said today in an interview with Bloomberg Television. “Systemically they are not relevant anymore, the Greek people, so I’m not afraid for any other country.”

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