Greek Notes Rise to 1-Month High on Willingness to End DeadlockLukanyo Mnyanda, Eshe Nelson and Anchalee Worrachate
Greece’s government bonds rose, pushing prices on two-year notes to the highest in more than a month, as the country resumed efforts to break a deadlock with creditors amid evidence that voters want the government to compromise.
The gains pushed down yields on the notes due in 2017 toward the lowest in a month. Prime Minister Alexis Tsipras said in an interview on Star TV late on Monday that voters could be asked to decide on whether to approve an agreement with creditors that may not be in line with his campaign pledge to end austerity, signaling a willingness to compromise.
“Recent steps taken by Greece signal the willingness to be more cooperative and to reach a deal,” said Gianluca Ziglio, a strategist at Sunrise Brokers LLP in London. “That is seen as market positive, although I’d remain cautious.”
Greece’s 3.375 percent securities due in July 2017 rose 2.505, or 25.05 euros per 1,000-euro ($1,097) face amount, to 71.88 as of 4:45 p.m. London time. That’s higher than any closing price since March 25.
The yield on the notes fell 196 basis points, or 1.96 percentage points, to 20.36 percent. It last dropped below 20 percent on March 27. The yield climbed to 30.05 percent on April 22, the highest since the nation’s debt was restructured in 2012.
Two opinion polls published over the weekend showed a continuing drop in support for the government’s confrontational stance in talks with the euro area and the International Monetary Fund. More than half of respondents in an Alco survey in Proto Thema newspaper said the government should compromise even if creditors reject Greek demands.
Greece’s ASE Index of stocks rose for a fifth day, climbing 1.4 percent.
Trading in Greek government bonds remains scant, with no turnover through the central bank’s electronic secondary securities market, or HDAT, on Monday, according to ANA.
Greek 10-year yields dropped 65 basis points to 11.07 percent on Tuesday. The difference between the bid and offer yields for Greece’s 10-year securities, a measure of the bonds’ liquidity, was about 25 basis points, according to data compiled by Bloomberg. In contrast, the spread on similar-maturity German bunds, the euro region’s benchmark securities, was 0.1 basis point.
Spanish and Italian bonds declined after Portugal named the banks it would use as lead managers in sales of 10-year and 30-year debt. The syndicated transactions are expected to be launched and priced in the near future, subject to market conditions, according to a person familiar with the matter.
Peripheral bonds also fell in line with European stocks amid a broader risk-off tone in the market, according to Luca Cazzulani, a Milan-based senior fixed-income strategist at UniCredit SpA.
Spain’s 10-year yield rose two basis points to 1.32 percent, with the yield on similar-maturity Italian bonds also up two basis points at 1.38 percent. Portugal’s 10-year yield increased seven basis points to 1.97 percent, while equivalent German yields were little changed at 0.16 percent.