Global jitters hit Greek bonds

Just days before Greece is to emerge from its international bailouts, upheaval in international markets took a toll on Greek bonds on Thursday, driving yields up above 4 percent.

The increased turbulence comes amid market jitters ahead of the unveiling this fall of Italy’s 2019 budget by the country’s new Euroskeptic coalition government.

Investors’ fears that the populist administration in Rome will seek to clash with Brussels over the latter’s demands for fiscal discipline have had repercussions on Italian bonds, and in turn on Greek paper.

Concerns about the Turkish economy, which saw the lira tumble to a new record low against the US dollar yesterday, have aggravated the situation, as have worries over the Russian economy following the new sanctions imposed by the US.

The yield on Greek 10-year bonds reached 4.14 percent on Thursday, the highest level since late June. The performance mirrored Italian bond yields, which rose across the curve on Thursday, with the country’s 10-year benchmark bond reaching 2.9 percent.

Greece’s 5-year debt also took a hit, as its yield rose to 3.2 percent, also the highest rate since late June, while the yield on the country’s 7-year state bond was at 3.75 percent.

After securing a debt relief package at a summit of eurozone finance ministers in June, Greek authorities had indicated that the country was moving toward financial independence.

However, the turbulence on global markets is now broadly viewed as too great for Greece to attempt such a foray in the coming weeks.

In the current climate, Greek authorities should abandon any plans for a new bond issue in the fall, fund managers told Kathimerini.

“We should not make the same mistake as that earlier this year,” one fund manager said, referring to the issue in February of the 7-year state bond whose yields spiked unexpectedly and which was not the success authorities had hoped for.

In a report on the Greek economy on Wednesday, Parliament’s budget office noted that any further Greek bond issues should be “well-designed and careful,” given that Greece has no urgent financing needs.