Greek bonds are “safe havens”.
“Safe haven” for investors are the Greek bondsin the face of the turbulences that trigger the international money markets, the negative messages sent by large European economies and the turbulent geostrategic environment of the two wars in Ukraine and the Middle East.
Greece now borrows cheaper than Italy and France, having significantly reduced the spread compared to Germany, while the difference in our country’s favor is also significant in relation to Great Britain.
In five-year bonds, Greek yields, which are around 2.4%, are now lower than those of France (2.5%) and Italy (2.8%), while they fluctuate almost at the same levels as those of Spain (2 .4%). As for Great Britain, it borrows, through five-year bonds, with an interest rate of over 4%. It is indicative that the yield of the German five-year bond is at 2%, as a result of which the difference with the borrowing costs of the Greek government has decreased significantly.
In ten-year bonds, Greek yields range at 3.1%, Italian at 3.4% and French at 2.9%, while Spain borrows at a yield of 2.9% and Great Britain at 4.2%. The yield on the German ten-year bond is 2.2%.
This is a complete reversal of the picture that prevailed in the money markets in the last decade, which is due to the new data that have taken shape in the European economy. At a time when Germany and France are sending signals of stagnation or recession, the Greek economy is on a stable development trajectory having ensured stable conditions in public finances both due to the high primary surpluses and the downward trend of the debt which is projected to decrease by 30 units as a percentage of GDP until 2027.
This picture is reflected in the reports of the rating agencies on the Greek economy, despite the challenges highlighted in them and concerning geopolitical risks, the balance of payments and bad loans. Besides, as noted by analysts and economic factors, an important advantage for Greek securities is the sustainability of the Greek debt. 2/3 of the Greek public debt, approximately 230 billion euros, concerns the so-called official sector and is “locked” in stable low interest rates. At the same time, the annual borrowing program of our country does not exceed 10 billion euros, which is due to the high primary surpluses, while the cash reserves of the State have reached a record level of 44 billion euros.
In this favorable context, the policy drawn up by the financial staff and the INSTRUCTIONS regarding debt management in an investment grade environment in which Greece now finds itself. An important element of this policy is the lengthening of the debt repayment period with bond issues of more than one year and, at the same time, limiting the issue of interest-bearing promissory notes. This goal is also served by the re-issuance of bonds with a duration of more than 10 years. The early debt repayment policy followed by the government is also a critical element. It is characteristic that despite Eurostat’s retroactive review of the debt for the period from 2020 to 2023, incorporating deferred interest of €12.5 billion from loans taken out by the EFSF in 2012, the difference in the balance of debt fluctuated at limited levels of around 2% due to early repayments resulting in this reaching 163.9% of GDP in 2023.
