Actuarial news and views from Cape Town and beyond

Greek government bonds

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A relevant issue relating to bond markets is that of the current government bond market in Greece. The ActEd notes emphasise that government bonds are usually very secure resulting in a relatively lower yield. This is, however, contingent on the stability of the political situation.

An article in the Wall Street Journal from April 2015 includes a line graph to illustrate the weekly yields on Greek 10-year government bonds from 2010 – 2015. The relatively rapid increase in these yields during periods of political uncertainty is reflective of market sentiment.

According to the article, the Greek government sold more than $4 billion worth of bonds in April 2014. Invesco (an asset management firm), however, responded to the political uncertainty by selling “most” of the bonds that they had bought in September 2014. A representative of another asset manager (Russell Investments) stated that they have no direct exposure to any Greek assets because of the political uncertainty.

This year, the Luxembourg stock exchange had suspended trading of 25 government, bank and corporate bonds at the end of June as a result of the political situation. On 24 July 2015, however, this ban was lifted.

More recently, Tradeweb (a trading platform) lifted their restriction of trading of Greek government bonds on 3 August 2015 after these has been put in place in June 2015.

The Greek stock market was also re-opened on 3 August 2015. This video posted on CNN emphasises the idea that “clarity and confidence” in the market would convince people to take an interest in the Greek economy.

Yanis Varoufakis, the previous Minister of Finance (until 6 July 2015) posts various in-depth entries covering developments in Greece and the rest of Europe if you are interested in following these changes.


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