26/02/2015 09:58
Yields of Cypriot bonds remain high despite the removal for the time being of the Grexit risk.
Yields of Cypriot bonds have fallen in recent days, after the agreement to extend Greece’s loan agreement. But they remain at levels above 5% making Cyprus’ return to the international markets infeasible.
Cyprus issued debt at 4.75% in June and hopes that this year it will draw part of the maturing € 2,9 billion from the markets. Without official funding, however, due to the freezing of the program and the cost in international markets being higher than 5%, it is unknown how Cyprus will cover this year's needs.
Cypriot authorities hope that the political agreement in Greece will create the conditions for lower Cypriot bond yields, opening the road to the markets.
According to the latest available data, the yield for the ten-year Cypriot bond maturing in 2020, fell to 5.31% on Wednesday from 5.38% on Tuesday.
As the manager of Argus’ portfolio analysis, Savvas Theophilou says, Cypriot bonds have obviously been negatively affected this month, especially after the rapid developments about the Greek program, with yields peaking at 5.50% (from 4.75%) just before reaching an agreement with the Eurogroup.
"During the last days however, we see Cypriot bonds entering a recovery track since the agreement to extend the loan agreement of Greece played an important role. This fact may further restore the stability of the financial system, "he says.
The yield of Cypriot bonds is about double that of other countries in the European region and the second highest in the euro zone after Greece.
The yield of the ten-year bond of Greece, which rose more than 10% before the agreement with the lenders, stands at 8.6% from 8.5% in Tuesday.
Portugal’s ten-year bond yield remained at 2% and Italy’s bond yield fell to 1.4% from 1.5%. Spanish ten-year bonds’ performance fell marginally to 1.37% against 1.38% in Tuesday and Ireland’s yield remained at 1%.
A report by Moody's rating agency published yesterday indicated yields on 10-year Greek government bonds rose by 290 basis points in the last quarter, as uncertainty arose about the continuation of Greece’s financial support program.
However, government yields in other peripheral economies have continued to fall, with no evidence of contagion.
According to the agency, the risk of contagion from Greece to other peripheral countries is materially lower than during the euro area debt crisis in 2012.
Yields of Cypriot bonds have fallen in recent days, after the agreement to extend Greece’s loan agreement. But they remain at levels above 5% making Cyprus’ return to the international markets infeasible.
Cyprus issued debt at 4.75% in June and hopes that this year it will draw part of the maturing € 2,9 billion from the markets. Without official funding, however, due to the freezing of the program and the cost in international markets being higher than 5%, it is unknown how Cyprus will cover this year's needs.
Cypriot authorities hope that the political agreement in Greece will create the conditions for lower Cypriot bond yields, opening the road to the markets.
According to the latest available data, the yield for the ten-year Cypriot bond maturing in 2020, fell to 5.31% on Wednesday from 5.38% on Tuesday.As the manager of Argus’ portfolio analysis, Savvas Theophilou says, Cypriot bonds have obviously been negatively affected this month, especially after the rapid developments about the Greek program, with yields peaking at 5.50% (from 4.75%) just before reaching an agreement with the Eurogroup.
"During the last days however, we see Cypriot bonds entering a recovery track since the agreement to extend the loan agreement of Greece played an important role. This fact may further restore the stability of the financial system, "he says.
The yield of Cypriot bonds is about double that of other countries in the European region and the second highest in the euro zone after Greece.
The yield of the ten-year bond of Greece, which rose more than 10% before the agreement with the lenders, stands at 8.6% from 8.5% in Tuesday.
Portugal’s ten-year bond yield remained at 2% and Italy’s bond yield fell to 1.4% from 1.5%. Spanish ten-year bonds’ performance fell marginally to 1.37% against 1.38% in Tuesday and Ireland’s yield remained at 1%.
A report by Moody's rating agency published yesterday indicated yields on 10-year Greek government bonds rose by 290 basis points in the last quarter, as uncertainty arose about the continuation of Greece’s financial support program.
However, government yields in other peripheral economies have continued to fall, with no evidence of contagion.
According to the agency, the risk of contagion from Greece to other peripheral countries is materially lower than during the euro area debt crisis in 2012.
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