As the latest season of the Greek drama premiers this week, investors are steering clear of the country’s bonds and stocks.
Greek government bonds have delivered the worst returns of all European sovereigns tracked by Bloomberg’s World Bond Indexes in the past three months, even after Prime Minister Alexis Tsipras managed to secure an accord with creditors for the disbursement of emergency loans in June. Greek bonds, excluded from the European Central Bank President Mario Draghi’s quantitative easing program, have been been stuck at the bottom of the wave that’s lifted debt markets across the euro area. The Athens Stock Exchange trails only Nigeria and Venezuela in the worst-performing primary equity indices tracked by Bloomberg in the period.
“Greek bonds have been in no-man’s land since June,” said Patrick Esteruelas, head of research at Emso Asset Management, which oversees $3.2 billion.
“As long as people feel that the government is going to move extremely slowly at best, or backslide at worst, they will have doubts about the solidity of its bailout backstop”, he added.