Greece To Issue First 5Y Bond Since Bailout At Lowest Yields Since 2009

Tyler Durden's picture

For the first time since the bailout/restructuring, Greece will issue long-term debt to the public markets. These 5 year-term English Law bonds (which is entirely unsurprising given the total lack of protection local-law bonds suffered during the last restructuring) are expected to yield between 5 and 5.25%. That is modestly higher than Russia, below Mexico, and one-sixth of the yield investors demanded when the crisis was exploding. The secondary market has rallied to this entirely liquidity-fueled level leaving onlookers stunned (and likely Draghi et al. also). Greece must be 'fixed' right? Just don't look at the chart below...

Greece is rated Caa3 by Moody's Investors Service and B- by Standard & Poor's Corp. and Fitch Ratings.

The commotion is US capital markets over huge IPO gains which are due more than anything to very small floats and major 'get rich quick' demand can also be found here as the issuance size is minimal leaving a world of yield chasers spying a European nation offering yields over 5% that is currently not rioting...



Claims that is the best example of positive sentiment and of a new normal are foolish - if nothing else, this is a sign of utter complacency and exuberance.

As WSJ reports, Greece is anything but fixed...

Even with the prospect of a recovery in sight, Greece's economy is still in pain. Since its precrisis peak in 2008, the Greek economy has shrunk by a quarter in size, unemployment is at a staggering 27.5%, and standards of living—made worse by successive government cutbacks—have gone back by a decade or more.


On Tuesday, Greece's two public sector umbrella unions—GSEE and ADEDY—staged yet another general strike over Greece's austerity program, shuttering public sector services across the country.

We'll leave it to BofA's John Wraitch to sum it up...

“It seems everything is bulletproof even when you do get relatively bad news; people are prepared to look straight through it,”


“People are still hunting for yield and in the absence of any more material rise in safe-haven yields that means turning to bond markets that a more rational evaluation might lead you to be cautious about.”

Greek officials are crowing and will announce results tomorrow...


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Max Damage's picture

Sold to the dickhead at the back!!!! Most likely our pension fund manager who has done a deal to fuck us over ;)

BandGap's picture

Sell my precious metals and buy Greek bonds. Got it.

I can't believe this country is still in business. Greece is like the corpse in "Weekend With Bernie". Just a fucking prop.

firstdivision's picture

Mr. Corzine, how much would you like to buy?

Van Halen's picture

This is a serious question:

After what Greece has been through and we've even heard rumors of ANOTHER bailout, WHO would buy a Greek bond?

Are they being bought by someone taking a tax writeoff? There has to be a reason someone would be crazy enough to purchase one of these.

Buying a bond issued by the city of Detroit would be smarter. At least you could bet in some small way that Obama's buddies in the Fed might come along and pick up the slack if the city defaulted.

Global Observer's picture

The only thing that seriously concerns a bond-buyer is the possibility of a default. While holders of Greek-law Greek bonds received a 70% haircut (and the remaining converted to English law bonds) last time, at the same time those holding English Law Greek bonds received no haircut. So the risk of default on English Law Greek bonds is not high. There will be takers for them.

Rafferty's picture

My source tells me, surprise, that the whole thing is utterly corrupt and to keep the  Euro Ponzi alive fund managers can receive substantial and immediate 'inducements' to purchase this junk.  End of the day the poor saver will pay, as always.

skistroni's picture

These bonds will be under English Law, and therefore are much less likely to suffer the fate of the previous bondholders. And most of the restructured bonds are now held by European central banks, so when Draghi begins printing for real, they will also drop in yield, as they will be much more likely to be repaid at expiration. And BTW, 95% of the bailout money actually goes to pay expiring bonds and coupons. So, a new bailout means more certainty that bonds will be repaid. 

A much more serious question in my book is why a bunch of proven incompetent leaders keep asking for more money to "manage"?

Van Halen's picture

TY Global and Skistroni, one more question:

OK, English law says the bond is protected, but isn't the question whether Greece will actually have the money to pay? Would the ECB have to step up and pick up the tab should Greece default? And would they... again?

agent default's picture

Debts that cannot be payed back will not get payed back.  Basic rule of economics. 

Telemakhos's picture

See, this is why I don't understand Europe.

  1. "And most of the restructured bonds are now held by European central banks…"
  2. "And, BTW, 95% of the bailout money actually goes to pay expiring bonds and coupons."

The bailout money comes from, more or less, the central banks, who are now, more or less, paying themselves off.   I suppose that this helps to keep up the illusion that the central banks haven't just canceled those debts and that Greece has some agency in this and an incentive to amend its ways and become fiscally sustainable instead of returning straight to the bond market for another round of soon-to-be-unpayable debt (yay more submarines?).  At some point, though, a point that I thought had already come with the first round of near-bankruptcy, accounting needs to be simplified and credible, government expenditures need to be reduced, and favorable conditions need to be arranged for productive employment instead of frenzied importing of goods without any notion of how to pay for them.  Crises arise in part because of greed, but perhaps in larger part because there are limits to human understanding of complex situations, and Greek finance long ago exceeded those limits (hubris, the same reason that central planning fails): markets only function over the long term if actors in the market know what they're doing and what their counterparties are doing, and there's no way to do that if you're buying a Greek bond now.

skistroni's picture

There's no way that it can become sustainable. It's only a game of musical chairs, and at the moment there are plenty of chairs, so everyone is enjoying the game. Then someone brought in 10 new chairs to make the game last longer. But 15 new people also showed up to join the game. And you know where I'm taking this. 

Long term, you are correct, although I keep asking myself for the last 4 years, how long is "long"? I do wish for a radical change which will probably come once with a collapse, but at the same time I'm not sure I can handle the thought of pensioners like my mother and grandmother starving and chilling to death by the thousands. Unfortunately pain is on the way. 

Seasmoke's picture

Poor Jon Corzine, born too early. 

Sudden Debt's picture

And banks are hughely rewarded for the 2009 yardsale of greek bonds...

nice to know where our taxmoney is going yet again...

orangedrinkandchips's picture

Bizzaro Risk/Return......


That is when the yeild drops to lowest levels while risk increases to highest levels......


Makes perfect sense! lol.....

scubapro's picture

so i could short greek bonds with a cost to carry of only about 5.5% and less if I'm $ based.   smells nice

Caracalla's picture

Short at your own risk.  You are not really shorting Greece here, you are shorting Germany...and the 5 year DE bond yield can go much, much lower.  With the EU buying all of the southern European junk debt, there is no risk and no reason for yields to go higher.

savedeposit's picture

Hi ECB, you can keep your toxic shitpile, bye

thorgodofthunder's picture

Looks like an easy short. Any recommended pair trades here?

Iam Yue2's picture

Fixed. ....

One child in every three was at risk of poverty or social exclusion in Greece in 2012, a new study published by the UN's children's' agency Unicef has found.

In a report entitled "The situation of children in Greece, 2014: The impact of the economic crisis on children", Unicef says that some 686,000 children, or 35.4 per cent of the total, were at risk of poverty or social exclusion, up from 30.4 per cent in the previous year.

elwind45's picture

Its what they do! Follow policies to cause social ill and than report about how much good works they do and how THE PEOPLE spit back the load!

Caracalla's picture

Yet more evidence that a massive EU QE program is on the way which will send stocks much higher.  Why would Spanish debt pay a lower yield than the U.S. unless the bonds came with an iron-clad guarantee?  Why would Greece pay only 5% for a 5 year loan just a couple of years after defaulting unless the EU is backstopping them?  Just BTFD; it's all a sham and will never go down.

Spungo's picture

How does that old saying go? A fool and his money are both retarded?

logicalman's picture

More valueless paper promises.


RealityCheque's picture

It must be "insane shit wednesday" again.

Anyone who buys this crap deserves everything coming to them. In fact its amazing that they can remember how to breathe, given their obvious lobotomized state.

flyingpigg's picture

What search term do I need to use to find the ticker symbol for the new issue: "5Y zombiebonds"?

elwind45's picture

Summertime and the historic yield of 5% sounds about right? As for pricing. Who in hell wants to see hardships amougst people you have grown to love in 2 short and sun pact weeks? QE in Europe is CALLED summertime? American bond yields are a better value DUH!

elwind45's picture

This myopic view of EUROPE being on its last leg is BULLOCKS! The south made it to x-mas again BTD(EUROPE)?

elwind45's picture

If for some reason cheap CHINESE goods were in AMERICA'S REARVIEW than our perception of Europe would radically change with dollar collapse and the rebirth of American manufactoring or DA WAR?

elwind45's picture

Taking a look at the DAX takes your focus from WALL STREET? Europe trouble and the CNBC world two peas

Rising Sun's picture

Who the fuck would buy this shit????


Oh wait, Yellen!!!!!  You stupid fucking cunt!!!!  Get your fucking check book out!!!!!!!!

elwind45's picture

Back in the good ole days! Then some damn fool invents the wheel listen to the white wolf..... during the 20 th century wall street could pound stock and then flip when Europe closed! That created the stock index futures market and now HFT/EURONext and amazing effects to cashflow moneyflows and handicaps? A three baggar

Peter Pan's picture

The third line on the graph shoukd have shown the growth of Greek debt despite the "assstance" of the TROIKA.

MS7's picture

The WSJ sees recovery in sight for Greece? I'd like to have what they're drinking. The mention of the unions being on strike is a red herring. They had strikes before austerity too. Their strikes are completely ineffectual, likely because the union leaders are mostly sell outs, in that they are only one-day strikes. Strikes are powerful when they go on until the demands are met. A one-day strike is just symbolic.