Greek Sovereign Bond Yields Rise On Bailout Fears
LONDON (Dow Jones)--Yields on Greek sovereign bonds with maturities of up to 10 years rose Tuesday as doubts persist about the ability to implement the second bailout deal agreed in July.
The yield spread between Greek two-year bonds and German two-year debt widened nearly 180 basis points to 3,735 basis points, as the Greek two-year yield rose above 38%, according to Tradeweb.
The recent high of 39.38% on Greek two-year yields came on July 19, two days before European Union leaders agreed a new EUR110 billion rescue deal for Greece at an emergency summit.
Two-year yields immediately fell back to below 25%, but have been driven higher in recent sessions as problems emerge with the new bailout, with Finland's demand for collateral being echoed by some other euro-zone member countries.
"There are more and more doubts about how the plans will be implemented," said one trader.
Investors are also waiting for the next report by the International Monetary Fund, European Central Bank, and European Commission on how well Greece is meeting its commitments under its rescue program, this trader said.
A second trader said Greece met a bond redemption of around EUR6 billion Friday, but that there were no signs that investors had reinvested the money in Greek debt.
Portuguese bond yields were also higher, with two-year yields rising 50 basis points to 12.44%.