Greek 5-Year Government Bond Yield, Once Over 60%, Now Negative

First Ever Entry into Negative Interest Rates on the 14th

[Asia Economy Reporter Park Byung-hee] According to major foreign media reports on the 14th (local time), Greece's 5-year government bond yield has fallen below zero for the first time in history.

About 10 years ago, during the Eurozone debt crisis, Greece received consecutive bailouts, and at one point, the 5-year government bond yield exceeded 60%. Compared to that time, the situation has drastically changed.

As the European economy, which had fallen into a recession due to COVID-19, is expected to enter a recovery phase, the European Central Bank (ECB) continues large-scale government bond purchases, causing Eurozone bond yields to keep declining. With Greece entering negative yields, Italy remains the only Eurozone country whose 5-year government bond yield has not turned negative.

The ECB plans to purchase Eurozone government bonds worth 1.85 trillion euros through the Pandemic Emergency Purchase Programme (PEPP) introduced last year. At last week's monetary policy meeting, the bond purchase plan was maintained, and ECB President Christine Lagarde emphasized in an interview on the 14th that it is still too early to reduce Eurozone bond purchases.

Last week's successful auction of Greece's 10-year government bonds is also analyzed as a factor in the decline of Greek bond yields. During the $2.5 billion auction, a record-high 30 billion euros of funds were attracted.