Greece returns to mainstream bond indices in 2024 as its debt has already been upgraded to investment grade by two major rating agencies, S&P (last October) and Fitch (early December).
“This is an important milestone for Greek debt as many international investors build their portfolios around investment grade (IG) indices, which may lead to an increase in demand for Greek bonds,” UBS said in a report.
According to UBS, Greek government bonds could participate with a 1% stake in the Bloomberg Euro Ag index. Their entry will probably take place in January. Their average duration is estimated at 7.02 years and will slightly increase the overall duration in the index.
UBS analysts remain bullish on the Greek government bonds despite the strong performance this year. With their prices rising, 10-year bond yields have rallied more than 100 basis points since mid-October, while the spread against the German bonds has narrowed to close to 100 basis points (1 percentage point).
The rally of Greek bonds is more dynamic than that of other bonds in the region. Greek bonds have consistently outperformed Italian bonds.
