Following in the footsteps of the virtual collapse of the Greek stock market and the overall political climate prevailing in the country, Greek government bond yields have shot through the roof, with 10-year bond yields moving up by 2.1% to 10.57%.
At the same time, the spread between Greek 10-year bonds and German 10-year bonds rose to 1051 basis points.
The return of Greek government bond yields to such high levels would seem to suggest that the days when Greece might be able to return to private credit markets are still far away.
Interestingly enough, however, there are analysts out there who feel that the Greek situation is not as bad as it appears to be.
As reported today in Bloomberg, “Bank of America Corp. and Greylock Capital Management say the country’s bonds offer better value than many of their peers.”
At the same time, Ricardo Garcia of UBS Wealth Management opines that the Greek government is committed to pension reforms and that there will soon be an end to the impasses with its creditors.
As for the prospect of new elections, Garcia says that “the risk of fresh elections in Greece is significant given the very slim government majority, but the more radical elements of Prime Minister Alexis Tsipras’s party have been removed from government.”
And according to Diego Ferro at Greylock Capital Management, “Greece is more attractive than other peripheral bonds which offer yields close to zero.
As he says, “Greylock sees value in short end of Greek curve and is keeping its holdings in Greek sovereigns and, among others, favors the bonds maturing 2017.”
But this is not a view shared by Gianluca Ziglio at Sunrise Brokers LLP, who feels that “there is no safe harbor in the periphery and people are becoming increasingly skeptical about what the ECB can deliver in March and really achieve.”
According to Ziglio, “Greece remains a major scare.”
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