Fixed income analysis

Greek state bond prices rose and yields fell to new record lows in the domestic electronic secondary bond market on Wednesday.

The 10-year Greek bond yield fell to 1.19 pct from 1.22 pct on Tuesday, falling below the 1.20 pct barrier for the first time ever.

The yield in Greece's 10-year Treasury bond continued to dive on Thursday, outpacing even Italy's where the rally was fueled by the agreement between the Five Star Movement and the Democratic party to form a coalition, pushing Lega Nord and its controversial leader, Matteo Salvini, into the opposition.

Greek bonds rallied strongly on Tuesday, with yields for most of them, irrespective of duration, dropping to historic lows.

A strong bond market rally today followed the government's announcement of a complete lifting of capital controls which were instituted in June, 2015.

The yield on the ten-year bond dropped to 1.83%, a 12 basis-point drop, or 6.45 percent as compared to Monday's closing.

It should be noted that the return on the 10-year bond has dropped by approximately 15 basis points.

The yield on Greece's benchmark 10-year bond dropped below 2 percentage points for the first time ever on Wednesday, as Greek securities have continued to gain ground since the May 26 European ballot that brought about the resignation of the previous government in Athens.

Greece's benchmark 10-year government bond yields dropped to their lowest since 2006 on Monday after Moody's raised its rating late last week, bolstering investor optimism towards the eurozone's most indebted country.

Moody's on Friday lifted Greece's issuer ratings to B1 from B3, citing the effectiveness of the country's reform program.

Greek bond yields eased significantly on Tuesday, in line with other eurozone peripheral bonds, remaining on the positive course set in mid-January, right after the issue of the five-year note. This is paving the way for the Public Debt Management Agency to implement the plan to issue a benchmark 10-year bond next month.

The rally in Greek bond prices that followed last week's issue of a five-year note came to an end on Monday.

Analysts note that while the strong demand for the issue has led the government to start planning for its next market foray, the current favorable climate will be hard to sustain, as Greece remains "a special case."

The markets appear particularly keen on the new Greek bond issued last Tuesday, as its yield has shown a significant improvement since then, partly thanks to the support from the favorable atmosphere internationally after the Fed's decision to be patient on its rate policy.

Greek government bond yields fell on Tuesday, outpacing eurozone peers, as Greece began selling a five-year bond for the first time since emerging from an international bailout five months ago.