Greece debt tender oversubscribed; yields drop and vulture investors get giddy that they might actually get paid


Spread History of 1-year Greek to German Bonds

More extend and pretend going on with the Eurozone`s propping up the zombie gov`t of Greece.  The yields dropped yesterday as the IMF suggested that they are well within their current terms agreed to by the IMF. Their auction was oversubscribed  by 1.8 times where blue chip and vulture investors lapped up Greek debt.   The premium investors demand to hold 10-year Greek government bonds rather than euro zone benchmark German Bunds dropped to about 700 bps. 

Congratulations Greece, you are able to refinance your debt to extend your debt payments.  Go your way and spend no more. 

Just note, that this is not exactly a rining endorsement as current spreads over German bonds are still about 700 bps.  The markets still give them a near certain default probabilities.  Greece is going to the financial markets and saying that it cannot repay their debts in a timely manner, so they are forced to refinance.  The yields required now by capital markets are much more dear than when they originally floated the debt so to me it seems quite silly for the world to be saying that this crisis is over. 

Spanish and Portuguese spreads are still about a quarter of the Greek spreads. 

The premium investors demand to hold 10-year Greek government bonds rather than euro zone benchmark German Bunds fell to its lowest level since June 22 on Tuesday after a successful Treasury Bill sale, via BW:
The 10-year Greek/German government bond yield spread narrowed by 12 basis points on the day to 699bps. In outright terms, the Greek bond yield was down nearly 18 bps.

At the sale of the 26-week T-bill the average yield dropped and foreign investors mopped up 27 percent of the supply.
More

Sep 16: Spanish Debt issue oversubscribed
Greek Debt yields fall
IMF offers to extend debt payments
Extend and Pretend until 2014:  Greece goes from paying 40BB per year to 70BB

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