Greek Government Bonds Drop as Presidency Vote Brought Forward

By David Goodman  Dec 9, 2014 11:27 AM GMT+0200

http://www.bloomberg.com/news/2014-12-09/greek-government-bonds-drop-as-presidency-vote-brought-forward.html

Bloomberg

Greek bonds fell, with the nation’s 10-year yield climbing the most in almost six weeks, amid speculation that early Presidential elections will trigger renewed political turmoil.

German bunds advanced, with the nation’s 30-year yield dropping to a record low on demand for the safest assets as stocks and crude oil tumbled. Greek Prime Minister Antonis Samaras yesterday brought forward the process of choosing a new head of state to this month, a move that risks triggering parliamentary elections in the nation, which returned to the bond market this year. Anti-bailout group Syriza, which currently leads in opinion polls, welcomed the announcement.

“Greek bids are the most hit today,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “The elections are an imminent political risk. With yields around 7.5 percent I don’t see Greece going back to the capital market to fund itself.”

Greece’s 10-year yield increased 42 basis points, or 0.42 percentage point, to 7.66 percent as of 9:25 a.m. London time, the biggest jump since Oct. 30. The rate has tumbled from as high as 44.21 percent in 2012. The 2 percent bond due in February 2024 fell 2.26, or 22.60 euros per 1,000-euro ($1,234) face amount, to 72.33.

Volumes Plunge

Trading of Greek government debt through the electronic secondary securities market, or HDAT, was 12 million euros yesterday, ANA reported. Monthly trading volumes plunged to zero in October 2011 from a peak of 136 billion euros in September 2004, Bank of Greece data show.

The difference between the bid and offer yields for Greek 10-year securities, a measure of the bonds’ liquidity, was about 20 basis points, according to data compiled by Bloomberg. In contrast, the spread on benchmark German bunds was 0.1 basis point.

Germany’s 30-year yield fell two basis points to 1.58 percent and touched 1.563 percent, the lowest since Bloomberg started tracking the data in 1994. The nation’s 10-year yield was little changed at 0.71 percent after dropping seven basis points yesterday, the steepest decline since Oct. 15.

Italian and Spanish (GSPG10YR) securities declined. The rate on Italy’s 10-year bonds climbed four basis points to 1.98 percent after falling to a record 1.942 percent yesterday. Equivalent Spanish yields rose three basis points to 1.82 percent.

Greek government securities returned 16 percent this year through yesterday, Bloomberg World Bond Indexes show. Germany’s earned 9 percent, Italy’s 15 percent and Spain’s 16 percent.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net Keith Jenkins