Greek bond yields and CDS soar­ing

Kathimerini English - - Focus - YIANNIS PAPADOYIANNIS

The heavy at­mo­sphereon the Greek bond mar­ket was se­verely ag­gra­vated yes­ter­day not only by the Ger­man Fi­nance Min­istry’s state­ment in fa­vor of the In­ter­na­tional Mone­tary Fund’s par­tic­i­pa­tion in the Greek pro­gram, but also by SYRIZA MP Nikos Xy­dakis’s ref­er­ence to a re­turn to the drachma.

The yield on 10-year Greek gov­ern­ment bonds was up 41 ba­sis points yes­ter­day at a seven-week high of 8.18 per­cent, which later eased to 7.94 per­cent.

Five-year credit de­fault swaps (CDS) – or the cost of in­sur­ing Greek gov­ern­ment debt against de­fault – rose 5 bps to 1,011 bps, the high­est clos­ing level since De­cem­ber 29, ac­cord­ing to fi­nan- cial in­for­ma­tion ser­vices com­pany Markit.

This cli­mate has re­sulted in fresh pres­sure on lo­cal lenders, in terms of both de­posits and non­per­form­ing loans, as con­cerns about the econ­omy are grow­ing by the day, with the sec­ond bailout re­view still un­fin­ished.

Credit sec­tor sources note that a de­cline in de­posit lev­els that started in mid-Jan­uary has been ac­cel­er­at­ing, de­spite the ex­ist­ing cap­i­tal con­trols. This has taken Jan­uary into neg­a­tive ter­ri­tory, while many bank cus­tomers have been ques­tion­ing staff about a pos­si­ble hair­cut on de­posits if there is a bank bail-in.

Af­ter a long pe­riod of de­cline, res­i­den­tial prop­erty prices in Greece posted their first – al­beit mar­ginal – growth in the third quar­ter of 2016, ac­cord­ing to the lat­est re­port by the Global Prop­erty Guide. The 0.03 per­cent rise was from Q2, while there was a 0.53 per­cent drop from the same pe­riod in 2015.

SYRIZA deputy Nikos Xy­dakis gen­er­ated con­cern in bond mar­kets with his talk of a drachma re­turn.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.