Friday, April 04 17:21:29
The rally in Greek bonds could get another boost if Moody's upgrades Greece's credit rating, helping smooth the country's planned return to market just two years after it defaulted.
Moody's is scheduled to release its review of Greece's rating after the market close on Friday, with banks such as RBS predicting as much as a two notch upgrade.
Though still deep in junk territory and below the ratings of the other two main credit agencies, an upgrade by Moody's would aid Athens' plans to issue a bond that investors believe will be a definitive step in the country's turnaround.
Greece's imminent return to markets also comes as the European Central Bank hinted on Thursday that it could make asset purchases to fend off potential deflation, stoking investor appetite for euro zone bonds.
"This is the beginning of the end of the sovereign debt crisis for Greece," said Jason Manolopoulos, managing partner at Dromeus Capital, an asset manager which holds Greek bonds.
Greece hired a group of banks to manage the sale of a 2 billion euro five-year bond on Thursday, Thomson Reuters market service IFR reported.
The bond is slated to be issued sometime this month, with some market participants expecting it as soon as next week.
The country, which has been locked out of capital markets since it accepted the first tranche of a 240 billion euro bailout in 2010, is rated Caa3 by Moody's, nine notches below investment grade. Standard and Poor's and Fitch rank Greece six notches below investment grade at B-.
"The expected rating upgrade, and the subsequent return of Greece, will give Greek yields another boost," said Christian Lenk, fixed income strategist at DZ Bank, predicting 10-year yields to fall below 6 percent.
Greek 10-year yields were slightly lower on the day at 6.15 percent. (Reuters)