LONDON: Long-dated Greek government bond yields fell to their lowest in almost six months on Tuesday, outpacing euro zone peers, as demand for a new Greek five-year bond topped eight billion euros.
More broadly, euro zone bond markets were supported by caution before Britain's parliament votes on Tuesday on proposals to change Prime Minister Theresa May's Brexit deal, looming high-level talks between the United States and China on trade and Wednesday's Federal Reserve meeting.
New bonds, sold via a syndicate of banks, from Greece, Belgium and Austria were also in the spotlight.
Greece began selling a new five-year bond, its first since it emerged from its third international bailout in August, drawing investor orders worth more than four times the likely 2 billion euro issue size, sources close to the sale said. Pricing indicated a range of 3.6 - 3.7 percent at the last update
"Given that every syndicated bond deal recently has gone well and Greece has been flagging it, I suspect the Greek deal should also go well," said Rabobank rates strategist Lyn Graham-Taylor.
Greece's 10-year bond yield fell five basis points to 4.00 percent, its lowest level since early August. Five-year bond yields were last down over 3 bps at 3 percent and not far off recent lows.
In the rest of the euro area, 10-year bond yields were little changed on the day .
Greece has tested market appetite under the watch of its international lenders in recent years. It sold 3 billion euros of seven-year bonds nearly a year ago.
NOT JUST GREECE
Belgium meanwhile received over 27 billion euros of demand for a 30-year syndicated bond, and plans to raise over 5 billion euros from the deal, according to a lead manager.
Weaker economic conditions have boosted expectations that record low interest rates will remain in place for some time. This has encouraged governments to launch new bond deals and take advantage of renewed investor appetite for fixed income.
"There are two factors at play - one is traditional front-loading of supply by issuers in the first months of the year," said Mathias van der Jeugt, rates strategist at KBC.
"Second, is that issuers are profiting from the global growth worries and stock market turmoil that has pushed yields lower. Also, the ECB downgraded its growth forecasts last week which opens the door for easy monetary policy for longer."
A string of recent successful syndicated bond deals include long-dated sales from Spain and Italy this month that met with record investor demand.
Germany sold almost four billion euros of bonds on Tuesday, while yields on six-month Italian paper sold at an auction turned negative for the first time since April.
A pricing of new syndicated Austrian bonds was also expected to take place on Tuesday.
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