Free Trial

GGBs Insulated Following S&P Upgrade

GREECE

GGBs yields are broadly flat early on following S&P's decision to upgrade Greece to Investment grade (BBB-; Outlook stable).

  • This has provided some insulation for GGBs as wider core global FI markets sell off, even though the IG attainment was widely expected.
  • As we flagged ahead of time, light tailwinds for GGBs were to be expected as some funds/indices only require one IG rating from the ‘big 3’ for inclusions/investment, although the major bond market indices won’t include GGBs until 2 of the ‘big 3’ have Greece at IG.
  • This leaves the 10-year GGB/Bund spread 4.5bps tighter at 144bps, while the spread of BTP/GGBs is 1.3bps wider at 56.5bps. BTPs move off early bests, after some ratings respite from S&P (covered earlier).
  • In the details, S&P noted that "Greece's public finances are improving thanks to the budgetary consolidation efforts", with significant progress being made in "addressing Greece's economic and fiscal imbalances".
  • With the incumbent political party attaining a majority in this year's election, S&P expect robust economic growth and continued falls in Government debt as a result of "additional structural economic and budgetary reforms, coupled with large EU funds".

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.