Btp, is it better to invest in Italy or in Greek bonds? The Rome-Athens derby on returns – Corriere.it

Rome-Athens, a yield derby which, at the moment, sees the Parthenon’s titles in the lead. The graph, in the final part, highlights the gap between the two curves, highlighting the leap forward in the Italian 10-year yield, against a significant drop in the analogous Greek term. Athens pays less (3.85% gross per year) to its ten-year creditors, while Rome has to disburse 4.31%. A striking figure, given that Greece’s rating is worse than ours (BB+ against the triple B of BTPs): Italian bonds are still investment grade, i.e. they fall, even if only slightly, into the category considered safer, while those of Athens are below this level. It is no coincidence that more than one observer invites us to evaluate this “decoupling” as the result of a number of technical factors, including the low liquidity of the Greek public debt and the spasmodic search for yield by investors looking for antidotes to inflation.

The analysis

But it is also fair to say that the reaction of the financial market in the aftermath of the political vote in Athens has been positive. And, even if the vote will return in a few months, because the party that won the elections aims to govern alone, gathering an absolute majority, most investors have promoted Greek economic policy. The table shows five issues from Athens and the same number from Rome: the expiry years are similar. Italian government bonds, which have been placed for many years for medium-high level amounts, excel in terms of volume traded, both numerically and in terms of overall amounts. The interest in Greek issues has grown in recent months, but quantitatively the values ​​traded are still lower than those characterizing the activity relating to our government bonds. The deadlines shown in the table cover a broad period of time. Biennial, five-yearly, seven-yearly, ten-yearly and fortnightly. For the most part, the aforementioned deadlines attract the greatest number of trades on a daily basis both on the Stock Exchange and electronically.

The prospects

In the bond component of the securities portfolio, in view of both a drop in the cost of living and, in the wake of the reference rates of central banks, including the ECB, the maturities on which to concentrate one’s strategy could be five-year, ten-year, above all, and, to a lesser extent, both the shorter ones and the fortnightly. This representation of the portfolio would allow the investor to benefit from the presumed rises in share prices, at a time when, presumably around the middle of next year, the monetary authorities will reveal the possibility that the dynamics of reference rates will undergo a reversal , going from bullish to bearish. It cannot be ruled out that Greek emission yields will decline at a faster rateas compared tothose of the BTPsbut it is certain that, in the face of the generalized drop in market yields, the cost borne by both Southern European government issuers will go down.