Investors Have Turned Net Buyers of Greek Bonds, Citigroup Says
March 12, 2010, 9:10 AM ESTBy Anchalee Worrachate
March 12 (Bloomberg) -- Investors have been net buyers for the past three weeks of bonds issued by Greece and other so- called peripheral European nations with widening deficits, including Spain, Portugal and Ireland, Citigroup Inc. said.
Investors also turned net sellers of benchmark German bonds for the first time in weeks, according to Citigroup data based on trading flows through the bank. Citigroup didn’t provide values for the trading it monitored.
European Union finance ministers will discuss next week whether any Greek bailout should be funded by issuing EU bonds guaranteed by euro region governments, said three people briefed on preparations for the meetings. The yield premium that investors demand to hold 10-year Greek bonds over similar- maturity German debt has narrowed to 305 basis points since jumping to 365 basis points at the end of January.
“The mood seems to have improved following relatively good news, such as political support for Greece,” said Robert Crossley, a fixed-income strategist at Citigroup in London. “We feel such optimism is unwarranted in the medium term, but short term there is no fighting the market.”
The spread between Portuguese and benchmark German bunds has contracted by 15 basis points since concern about Greece was at its most pronounced in January. Portugal sold more bonds than initially planned and at lower yields on March 10, even after Fitch Ratings said it may cut the nation’s credit ranking unless it steps up measures to strengthen its finances.
Greek Prime Minister George Papandreou last week announced a plan to reduce Europe’s biggest deficit by an additional 4.8 billion euros. The nation may get a 55 billion-euro bailout from the EU, Kurier newspaper reported today, without saying where it got the information.
--With reporting by John Fraher in London. Editors: Keith Campbell, Daniel Tilles.
To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
