Lorcan Roche Kelly, Bloomberg
The yield on the Greek 3-year bond passed back above 28 percent today (it had briefly gone above 28 percent on an intraday basis last Thursday).
Seemingly endless delays in coming to agreement with the institutions mean that uncertainty over Greece’s ability to meet future repayments continues to increase among investors.
The buildup of this uncertainty is clear from this chart showing how Greek bond yields have developed since the start of December 2014.
The Greek sovereign bond yield curve inverted — where yields on shorter-dated debt become higher than yields on longer bonds — on Dec. 8, 2014, and hasn’t looked back since. The shorter-term bonds’ yields took another leg higher following the election in January that saw Syriza take power.
Greece’s debt yields seem very unlikely to change for the better in the current climate, as there are currently no buyers at all for these bonds. It is seen as much too risky for most mutual funds and too expensive for other investors.
The pressure on Greece is starting to show as today the Greek government issued a decreeforcing local governments to transfer all cash balances to the central bank, citing “extremely urgent and unforeseen needs.”
