Greek bondsafter the recent superiority and especially the rally after the first round of the election, are trading as investment grade securities, according to analysts and bond managers.

Numerous records set by them over the past week also testify to this. It’s impressive how Greek State managed to borrow cheaper than European Union. The yield on 2-year Greek bonds reaches 3.13%, while the yield on the corresponding EU bonds issued to finance it Recovery Fund is 3.27%. At the same time, after 5 years, Greece is close to equalize the cost of borrowing with the EU. – which is valued by houses from the absolute “AAA” – with a yield in Greece of 3.46% compared to 3.2% for the EU.

Of course, the above comparison is “unequal” as the Greek market is very low in liquidity – and especially its very short-term securities (which means that their movements can be more intense) – compared to the high liquidity of its EU bonds. However, it certainly sends an important signal about how safe Greece is for investment, especially over the next four years. Investors estimate that after the second elections at the end of June, there will be political stability with a strong and independent government that will continue the path of reforms, and the fall of the Greek debt index will accelerate.

It is also a “ticket” to the investment level, which is a matter of time to be issued, even in early autumn. Investment banks that deal in Greek bonds have already begun building up positions in Greece to respond to the investor demand that this development will generate.

At the same time, Greek bonds also set a historical record compared to Italian bonds. Greece’s borrowing costs fell to historic lows compared to Italy, with a Greek 10-year yield of 3.9%, almost 50 basis points below the Italian 10-year yield of 4.4%. In addition, Greek bonds are approaching Spanish bonds, where the yield is 3.6%, and also closing the gap with Portuguese bonds: Portuguese 10-year bonds are trading at 3.3%.

Investor confidence fully returned after the first round of elections.

As Robert Tip comments in “K”.Head of Investments and International Bonds at PGIM Fixed Income, “Thanks to the improved fundamentals of the Greek economy and the increased likelihood of policy continuation after the election results, Greek bond spreads are now located between Italy and Spain, the two countries. that they are investment grade, which is a huge benchmark for their performance.”

“Greek bond performance is undeniably remarkable” as Jan von Gerich also comments in “K”., Principal Analyst at Nordea Research. “It can be easily argued that investor confidence has fully returned and that the Greek economy is heading in the right direction and the election results support that course,” he adds.

Apart from the investment grade perspective, Greek bonds have other important aces, such as the strategy pursued by the Public Debt Management Organization. “The IDF has fully implemented the publications program for 2023 and is ahead of other countries in this regard. This does not mean that Greece will not issue more bonds in the coming months, but that will only happen if demand is strong enough. Greek bonds are also exempt from the QT QT program, like all other Eurozone bonds that participated in the ECB’s PSPP, while the reinvestment flexibility of the PEPP program and the anti-fragmentation tool (TPI) have made the region’s bonds much more resilient overall in this regard. year”, as Ioannis Sokos points out in “K”, Head of Securities Market Research at Deutsche Bank.

Indeed, ODDIX fully met the publishing goals of the year, raising 7 billion euros before the first elections. With 35 billion euros in cash reserves, positive surprises are not ruled out in the coming months. According to K.when, for example, Greece reaches or is on the verge of reaching investment grade, ODDIX can take advantage of the favorable climate. New early repayments of GLF loans, even in two tranches in 2024 and 2025, from cash reserves are not ruled out, while a new auction program for additional placement of existing bonds to increase liquidity in the market is also possible.

Analysts are not surprised by the rate of Greek bonds. “I’m excited but not surprised by market movements” notes on “K” Berenberg Chief Economist, Holger Schmiding. “Italy are doing very well under Georgia Meloni. But under Kyriakos Mitsotakis, Greece has emerged as a star player among the eurozone’s most important countries. As soon as Mr Mitsotakis Once in power, Greece will be on its way to regaining investment grade. This may give additional impetus to Greek bonds. However, it is likely overpriced, so I expect the spread to narrow further, but modestly.”