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German Government Bonds Decline as EU, IMF Ready Greece`s Second Bailout
Date 03/06/2011 13:06  Author webmaster  Hits 1206  Language Global
3 JUN 2011

By Emma Charlton and Lucy Meakin | Bloomberg

Greece’s two-year notes rose, pushing the yields below 24 percent for the first time in more than five weeks, as European policy makers readied an additional aid package for the debt-stricken nation.

German 10-year government bonds fell, headed for their first decline in eight weeks, while two-year notes depreciated for a fifth consecutive day, pushing yields up by the most since the week ended March 25. European Union and International Monetary Fund officials will today complete a review of Greece’s plan for 78 billion euros ($113 billion) in asset sales and austerity measures as they prepare the nation’s second bailout in little more than a year.

A potential Greece deal “gives you a reason just to take on a bit of risk or readjust your position to be less short of risk at least,” said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. “It would be something that gives Greece another year’s breathing space.”

Two-year Greek yields fell 123 basis points to 23.33 percent as of 10:36 a.m. in London, the biggest intraday drop since May 3. They extended their weekly decline to 2.01 percentage points, the most since the five days ending March 18. The 4.6 percent security due May 2013 gained 1.39, or 13.9 euros per 1,000-euro face amount, to 73.06. Ten-year yields fell 10 basis points to 16.15 percent.

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