Greek bonds make big gains on QE hopes

Kathimerini English - - Front Page -

Gains in the re­gion of 60 per­cent have been ob­served in Greek sov­er­eign bonds since June lows, at­tract­ing buy­ers who are bet­ting that the Euro­pean Cen­tral Bank will in­clude them in its quan­ti­ta­tive eas­ing (QE) pro­gram.

So far the ECB could not pur­chase ad­di­tional Greek bonds be­cause of the lack of a fi­nan­cial pro­gram and due to the ceil­ing for Greek bond pur­chases hav­ing been reached. Once Greece pays the ECB-held bond that ma­tures to­mor­row, the Cen­tral Bank will be able to pur­chase new Greek bonds.

The price of the three-year Greek gov­ern­ment bond is­sued in July 2014 and ma­tur­ing in July 2017 in­creased 60 per­cent be­tween June 29 and Au­gust 17 this year.

The Greek gov­ern­ment five-year bond, which re­turned to mar­kets on April 14 last year, went from a low of 57 cents per euro of face value to a new high of 84.5 cents per euro on Au­gust 17, a 48 per­cent in­crease.

The Greek gov­ern­ment bond ma­tur­ing in 2025 has made price gains close to 70 per­cent.

The ECB can buy one-third of el­i­gi­ble gov­ern­ment bonds of each coun­try’s stock as part of a QE pro­gram. This amounts to nearly 16 bil­lion eu­ros for Greece, sub­ject to the re­li­able ex­e­cu­tion of the cur­rent bailout pro­gram.

Af­ter the ECB, Ger­man in­sur­ance group Al­lianz is the sec­ond­largest in­vestor in Greek bonds, in­creas­ing its hold­ing via Pimco In­vest­ment Man­age­ment this year to 1.2 bil­lion eu­ros.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.