Greek bond yields drop on Italy budget news, Eurobank merger

Greek 10-year government bond yields were set for their biggest one-day fall since September after a strong rally in Italian bonds helped boost support for peripheral assets.

Analysts also attributed the move to a boost for Eurobank , Greece’s third-largest lender, which saw its shares rise 9 percent on Monday on news it will acquire real estate company Grivalia Properties.

“The move in Greek government bonds is mostly to do with the Italy rally, but there are also some idiosyncratic reasons for it,” said ING strategist Martin van Vliet.

“There was good news on Greek public finances recently and more importantly, Greek banks are up today on the Eurobank merger news. Investors are very keen to see some consolidation in the sector,” he added.

Greece’s 10-year government bond yield fell as much as 17.5 basis points to 4.38 percent, its lowest level in two-weeks . Greek five-year govt bond yields were also down 17.5 bps to a two-week low at 3.35 percent.

Greek banks have been under regulatory pressure to tackle the bad debt problem, which restricts their ability to expand credit and assist the economy’s recovery. Eurogroup is looking to reduce its non-performing assets to around 15 percent by the end of 2021.

[Reuters]