Tuesday, May 31, 2011

Greek Bond Spreads Tighten Sharply

Wall Street Journal
May 31, 2011

Greek bond spreads against German bunds tightened sharply Tuesday after a report in the Wall Street Journal said that Germany is considering dropping its push for a rescheduling of Greek debt in order to facilitate a new package of aid loans.

"We are seeing the periphery tighten as risk sentiment improves on the back of the WSJ article but trading volumes are not huge for the time being," said a London trader.

The Greek/German 10-year yield spread—the amount of extra interest investors demand for holding Greek bonds compared to triple-A rated German bunds-—tightened by 0.32 percentage points to 13 percentage points.

In the two-year maturity, the Greek/German spread contracted by 0.36 percentage points to 22.84 percentage points, while in the five-year sector the spread has tightened in by 0.44 percentage points to trade at 18.06 percentage points.


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