STOCK MARKET WATCH -- Friday, 9 March 2012

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44. Greek Swapped Bonds Yield More Than Portugal’s Debt on Repayment Concern

http://www.bloomberg.com/news/2012-03-09/greek-psi-bonds-due-february-2024-bid-price-21-5-cents-offered-at-22-64.html

Greek government bonds due to be issued after the nation’s debt swap is completed were priced at less than 30 percent of face amount, signaling concern the country will struggle to repay its revised obligations.

While the debt swap is “a big step forward, it’s not totally out of the woods yet,” said Mohit Kumar, the head of European fixed-income strategy at Deutsche Bank AG in London. “There is a premium still demanded for Greece.”

Greece’s economy shrank 7.5 percent in the fourth quarter from the same period in 2010, the Athens-based Hellenic Statistical Authority said today. The contraction, based on non- seasonally adjusted data, was wider than a Feb. 14 preliminary estimate of a 7 percent contraction, the authority said.

The 2 percent bonds maturing in February 2023 were bid at 25.75 cents on the euro at 2:06 p.m. London time, BNP Paribas SA data on Bloomberg showed. They were offered at 26 cents, according to Jefferies Group Inc. That left the yield on the securities bid at 19.56 percent and offered at 19.42 percent, the data showed. Portuguese securities maturing in October 2023 yielded less than 14 percent.

“The market will price” Greek bonds “at a premium to Portugal,” said Kumar.