Citi sees Greek bonds as masking the misplaced floor of the final quarter of 2023, recommending that traders now place themselves in Greek securities, because it expects a discount in spreads with German bonds.
As he mentions, the “no 1” commerce of the summer season, that’s, on a three-month horizon, is the Greek bonds in opposition to the German ones, anticipating the unfold to lower to 86 foundation factors, from 101.5 bp. immediately.
As he explains, the pressures from the bond provide will progressively disappear, with Greek bonds anticipated to converge with the remainder of the area through the summer season.
The place is the strain coming from?
The pressures seen up to now interval, based on Citi, had been a results of persistent issuance strain, together with the 30-year in April which was a shock for Citi, because it admits.
Nonetheless, Greece has now accomplished 82% of its funding goal for 2024, already based mostly on Citi’s calculations recording the second highest stage of protection inside the Eurozone and greater than the common of the final three years.
It now expects no issuance for the remainder of 2024 and solely €1.8bn of tender provide, which ought to be a supportive catalyst. This technical assist ought to be supported by persistently sturdy financial fundamentals with GDP progress consensus among the many highest inside the Eurozone at 1.55%.
The position of assessments
In accordance with Citi, after incomes funding grade final yr from each S&P and Fitch, Greece stays on a constructive outlook from S&P and should obtain the identical from Fitch for the rest of 2024.
Fitch had already famous on December 1 Greece’s dedication to fiscal consolidation with a big main surplus, a projected discount within the debt-to-GDP ratio of 65 p.p. from the height of the pandemic to 2027, a powerful progress trajectory and enchancment of the banking sector.
The primary danger to additional rankings upgrades based on Citi is comparatively slower progress in absorbing Restoration Fund funds, with solely the fourth request made in April, on par with Spain however behind Italy and Croatia. Any progress on this entrance within the coming months may present additional impetus to the Greek economic system.
Supply: ot.gr
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