Bonds: Greek debt gains on deal with creditors, corporate bond spreads keep rising
By Alexander Bueso
Date: Saturday 23 Jun 2018
(Sharecast News) - These were the movements in some of the most widely-followed 10-year sovereign bond yields:
US: 2.89% (-0bp)
UK: 1.32% (+4bp)
Germany: 0.34% (+0bp)
France: 0.71% (+0bp)
Italy: 2.69% (-4bp)
Spain: 1.35% (+2bp)
Portugal: 1.82% (-3bp)
Greece: 4.15% (-17bp)
Japan: 0.04% (-1bp)
Gilts underperformed slightly at the end of the week, weighed down by gains in Sterling as investors continued to digest the previous session's 'hawkish hold' on interest rates by the Monetary Policy Committee.
Nevertheless, the big story of the day was the deal reached overnight to extend the maturities on the €96.6bn of debt owed by Athens to its so-called Troika of international creditors as a result of its second bailout by 10 years.
Greece was also granted a 10-year grace period on the interest and amortisation payments due on those loans.
Tellingly perhaps, the market reaction was rather tame, with IMF Executive Director Christine Lagarde saying that the Fund continued to have 'reservations' about the sustainability of the country's debt pile.
Longer-term Spanish notes were also a bit of a laggard.
According to reports in the Spanish Press, Europe Union Finance Commissioner, French Socialist Pierre Moscovici, had reportedly mooted the possibility of relaxing the fiscal targets for the new Socialist government in Madrid.
Nevertheless, in general sovereign bonds continued to find a bid on Friday as investors played it safe given the current global trade tensions.
To take note of, according to Bloomberg corporate bond spreads were at their widest in 16 months on Friday, amid heavy supply - including from Bayer and Wal Mart - and trade tensions.
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