Greek 10-year government bonds now yield 11.8%, after spiking over the last few months due to default fears.
Their yield is now near where it was during the initial outbreak of crisis concerns earlier this year and Greek bonds’ spread vs. German bonds is near a record high.
An 11.8% yield signals a bond with some very serious concerns surrounding it, especially given how low interest rates are in the U.S. adn Europe these days. It puts it flatly in speculative territory, given that markets are pricing-in a reasonable chance for some kind of default.
Still, Greek officials are out pitching the high yield as an opportunity:
“We feel confident that given where we are at the moment there won’t be any problem in hitting the target” for cutting the deficit, Papaconstantinou said in an interview in Athens yesterday. That will help secure Greece’s return to markets next year and convince investors that its bonds “are now becoming an opportunity rather than something to fear,” he said.
“There’s no need to do a longer period when you’re not happy with the interest rates available,” said Papaconstantinou.
Greece’s debt management head, Petros Christodoulou, said in a separate interview with Bloomberg today that the country’s debt is a “good opportunity” to “pick up good yields.”
What’s wild is that Greek yields are as high as they are while it is still widely believed that Greek will be bailed out by Europe in the event of an acute financing crisis. It’s hard to imagine how high they would be otherwise. Still, beyond the yields, the most compelling reason why Greek bonds could be a good buy right now is that major European banks are stuffed with them, which means there’s a huge incentive for European nations to preserve their value.