Greek Bonds Rise With Yields at 2016 Low on Debt-Talks Optimism

  • Deal possible within weeks: Netherlands' Dijsselbloem
  • Nation's stocks also advance, leading gains across Europe

Greece’s government bonds and stocks rallied amid optimism that euro-area finance chiefs just took a major step forward in their quest to unlock aid for the nation.

Yields on 10-year bonds dropped to the lowest this year, while the benchmark ASE Index led gains among equities across the continent. Euro-region finance ministers meeting in Brussels on Monday outlined plans to seek International Monetary Fund backing for an accord on Greek debt relief, and will reconvene in two weeks to finalize the negotiations. Dutch Finance Minister Jeroen Dijsselbloem said a deal between Greece and its creditors was possible within weeks.

“Greece is doing great after yesterday’s meeting,” said Daniel Lenz, lead market strategist at DZ Bank AG in Frankfurt. “The meeting delivered no details or decisions but at least gave some hints that there could be some willingness among most of the countries to agree with Greece on a compromise.”

The yield on Greece’s 10-year bond fell 72 basis points, or 0.72 percentage point, to 7.71 percent as of 4:03 p.m. in London, having reached 7.69 percent, the lowest since Dec. 3. The 3 percent security due in February 2026 rose 3.90, or 39 euros per 1,000-euro ($1,140) face amount, to 72.565.

Greece’s ASE Index jumped 3.2 percent, with Eurobank Ergasias SA gaining more than 13 percent and Piraeus Port Authority SA up more than 7 percent. The stocks index has rebounded more than 40 percent from its February low and is at its highest level this year.

Low Liquidity

Greek bonds earned 3.8 percent this year through Monday, compared to the 2.9 percent average return on euro-area sovereign securities, according to Bloomberg World Bond Indexes.

Even so, trading in Greek government bonds remains scant. The turnover through the central bank’s electronic secondary securities market, or HDAT, totaled 2 million euros this month through May 6, according to data from the Bank of Greece. The volume across all maturities was 41 million euros last month. It peaked at 136 billion euros in September 2004.

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