It’s hard to be shocked anymore in this bond market, but what happened the other day did jar me a bit.
Greece, the country that was forced to restructure by the EU and shafted their debt holders a couple of years ago with a haircut and reduction in coupon rate after the international bailout, was able to re-enter the bond market. Not only were they able to issue $3.5 billion in five year bonds at 4.625 percent yield, but they could have issued up to $6 billion worth if they wanted to, and most likely at a lower yield. Investors are willing to forgive the sins of the past if they can receive a higher yield than average and they have the guarantee that the EU will be buying these bonds as part of their bond purchasing program.
As far as the fiscal situation goes, Greece is still in junk status, the economy is only growing around .01 percent, the unemployment rate is still over 20 percent, and taxes are still just as hard as ever to collect. So, when Mario Draghi stated a couple of years ago that he was willing to do anything to save the Euro, we now know what he means.
I just hope these bonds come with the warning: buyer beware.