Greek bond yields hit the lowest level in nearly 14 years, highlighting a comeback for the country that was the focal point of a debt crisis that crippled the eurozone a decade ago.

The benchmark 10-year yield fell 3 basis points to 3.274 per cent, its lowest since September 2005, according to Refinitiv data. The fall, which comes as a result of a rally in the price of the government paper, marks a stark contrast from eight years ago, when yields climbed above 40 per cent.

Athens was then at the epicentre of the eurozone debt crisis that began in 2009. The country went through a deep recession and a trio of IMF bailouts, the last of which it emerged from in the summer.

The eurozone member, along with others on the region’s “periphery”, such as Portugal, has experienced a marked brightening in fortunes. Athens successfully tapped the international fixed income market last month, selling its first 10-year bond in nine years. It raised €2.5bn in a sale that attracted robust demand and was seen as an important moment for the Mediterranean country.

Greece has entered a “period of economic growth that puts it among the top performers in the eurozone”, an IMF report in March said, highlighting the sense of recovery. The fund projects real gross domestic product growth of 2.4 per cent for 2019.

Investors have also been cheered by Greece’s fiscal reform programme. Moody’s cited the country’s “record of strong fiscal performance”, which is “firmly established and is likely to be sustained” when it upgraded Greece’s credit rating by two notches to B1 last month.

S&P Global Ratings, which is due to publish its latest ratings report on Greece this month, rates it B+ with a “positive” outlook. Fitch has a stronger BB- rating on the sovereign.

The rally in Greek government debt comes amid broad gains in the sovereign bond market, prompted by expectations that major global central banks, including the US Federal Reserve and European Central Bank, will continue their dovish monetary policies for longer. The German 10-year Bund yield, seen as a eurozone benchmark, slipped into negative territory last month for the first time since 2016.

Greek equities have been in vogue this year as well. MSCI’s index of Greek stocks has soared by almost a fifth in 2019, compared with less than 15 per cent for the benchmark provider’s broad All-World index.

Still, some analysts remain wary of the Greek economic situation.

“The economy has returned to growth but is not as dynamic as had been hoped,” said Luka Raznatovic at Oxford Economics. “However, unless Greece can kick-start the economy and significantly expand its narrow tax base, it will remain trapped in a high-debt/low-growth environment.”


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