FAST FIVE: For The First Time Ever, Greece Issues Negative Yielding Debt
For The First Time Ever, Greece Issues Negative Yielding Debt As armies of fixed income strategists battle over whether US Treasuries are facing higher or lower yields, Greece has no such qualms and in a historic shift today, the former bond market pariah and Eurozone's most indebted nation, joined the exclusive club of negative-yielding European nations when bond investors lined up to pay the nation that was at the heart of Europe's sovereign debt crisis.
It's been an unprecedented turnaround for twice bankrupt Eurozone member, whose bondholders suffered massive losses back in March 2012 when the country was forced to accept the biggest bond restructuring in history, bringing the Eurozone to the verge of collapse.
“Current yields on their bonds do not reflect this risk.” Greece foray into negative rates comes after the ECB cut its deposit rates even deeper into negative territory and said it would restart quantitative easing (unlike in the US, the ECB has no qualms about calling “not a QE” by its real name).
Investors are also looking toward fiscal stimulus as the ability of monetary policy to stoke growth is tested to its limits, and unlike Germany, we expect Greece to fully take advantage of negative yields to stick it to creditors “investing” with other people's pensions.
Greece's government is forecasting 2.8% economic growth in 2020, which it says puts it on track to meet a budget target agreed with creditors while still enacting tax relief measures.