Divyang Shah, Senior IFR Strategist
Picking up such bargains really took off after the PSI last year on GGBs.
We started to take a more positive view on GGBs in Oct/Nov 2012 when 02/23 GGB price was below 35 cents.
We reaffirmed our positive view last week with prices around 65 cents and the yield breaking 8.50% (mid).
We retain a positive bias highlighting that while the economy poses a risk: 1) the desire to keep Greece within the eurozone and 2) the low risk of another PSI still makes GGBs attractive.
But the story with Greece has been broader than just the recovery on GGBs with speculative money seeing value on Greek equities, Greek banks and even corporate bonds such as Hellenic Petroleum.
How sustainable such broadening of risk appetite is remains to be seen and the real test will not come until we start to see a turn in the central bank liquidity tide.
