Yields on Greece’s new bonds may climb to as high as 20 percent amid “material risks” stemming from implementation of terms for the biggest sovereign restructuring in history, according to Morgan Stanley.
Traders are offering to buy and sell the potential new bonds at yields on 11-year securities of 22 percent, according to a person familiar with the prices who declined to be identified. Yields on exchanged Greek debt may be about 13 percent to 17 percent “in the medium term” as the nation faces an election and seeks to comply with terms of its bailout and debt-reduction programs, New York-based Morgan Stanley said yesterday in a research report.
The market may receive as much as 65 billion euros of new Greek bonds with an average maturity that’s increased to 20 years from seven years, Morgan Stanley fixed-income strategists Paolo Batori and Robert Tancsa and economist Daniele Antonucci wrote in the report. Absent “surprises,” the securities may stabilize at about 25 cents on the dollar, they wrote.