Greek bond yields fall significantly after Eurogroup agreement

Greek 10-year benchmark bond yields fell to their lowest level in almost a month while the two-year bond yields fell to their lowest levels since 2014 in the aftermath of a Eurogroup meeting which approved the disbursement of an 8.5 billion euros tranche to Greece and presented new details over a possible debt relief.

The 10-year bond yield fell 15 basis points to 5.71 pct, the lowest level since May 23, while the two-year bond yield fell to 4.81 pct, the lowest since October 2014. The general index in the Athens Stock Exchange rose 1.0 pct in early trading to reach the highest level since June 2015, while bank shares rallied 3.0 pct.

Analysts said that an agreement reached in Eurogroup could open the door for the inclusion of Greek state bonds in European Central Bank’s QE program, possible paving the way for Greece’s return to capital markets. A fresh proposal tabled to bridge differences over debt relief measures is expected to further support discussions in the Eurozone, while the IMF said it will participate in the program, offering a standby agreement of less than 2.0 billion US dollars.

“This is a big step forward, in our view, after several months of uncertainty,” Fabio Balboni, an economist in HSBC said.