Greece’s borrowing costs slid on Monday, after a cabinet reshuffle boosted sentiment and the country’s prime minister raised the possibility that Greek bonds could be included in the ECB’s bond-buying scheme early next year.
Two-year bonds yields touched a record low at 4.767 percent , according to Tradeweb data. Greece’s 10-year bond yield fell 35 basis points to 7.635 percent, its lowest level in five months, while five-year yields were down almost 40 bps.
Greek Prime Minister Alexis Tsipras, who reshuffled his government on Friday, told his new cabinet on Sunday that a second bailout review will be concluded in time for debt relief talks to begin in December.
If a review can be completed, Tsipras said, Greece can eye its inclusion in the European Central Bank’s quantitative easing – an asset- buying programme from which it is excluded – within the first quarter of 2017. It can then regain access to the bond market by the time its current bailout expires in 2018.
“Tsipras yesterday mentioned that Greek government bonds can be included in the QE programme in the first quarter of next year, this could be feeding through to the price action today, and maybe some domestic investors are taking him at his word,” said ING strategist Martin Van Vliet.