(Adds Greek stock quote, updates prices)
By John Geddie
LONDON May 10 Greek government borrowing costs
hit their lowest level in more than five years on Wednesday as
Athens looked set to clinch vital bailout loans from its
The yield on Greece's 10-year bond -- an indication of the
cost for the government to raise long-term cash in financial
markets -- hit its lowest level since the country's debt was
restructured in March 2012, according to Tradeweb data.
Analysts said optimism over the prospects for Greece
unlocking the cash it needs to make big debt repayments this
summer has even given rise to expectations that it may soon end
a near three-year exile from bond markets.
Greece's finance minister and central bank governor are
scheduled to speak in Germany next week about Athens' prospects
for returning to markets, although European officials have
previously said this will not be until mid-2018.
"There is a relief that Greece will get its disbursements to
get through the summer, and that is the main driver of the bond
rally," ING's senior rates strategist Martin van Vliet said.
"The Greek government is making the point that they can
return to the markets now and maybe I would give them a chance
but the way things are now it's going to be difficult."
Greek bonds are prone to volatile price moves and trading
volumes are low compared to other euro zone markets because the
junk-rated debt is not widely held by international investors.
A Greek government bond maturing in February 2027, part of a
strip of long-term bonds that emerged from the debt
restructuring, plumbed a new low of 5.616 percent on Wednesday,
having hit 5.633 percent on Tuesday.
Other Greek yields were the lowest since at least 2014.
Greek stocks rose for a 12th straight session on Wednesday,
the longest streak since 1991, bringing the country's benchmark
index close to erasing all losses it made since reopening after
an emergency bourse closure in the summer of 2015.
After six months of tense talks, Athens and its
international lenders -- the European Union and International
Monetary Fund -- reached a provisional deal last week on the
reforms needed to release new loans to the country.
The Eurogroup of finance ministers should approve the deal
at a meeting on May 22, provided the reforms are passed by
Greece's parliament, which is expected.
Athens also wants its lenders to agree on a formula to make
its debt sustainable in the longer term, so it can qualify for
the European Central Bank's bond-buying scheme and return to
But one of the big uncertainties in these negotiations is
whether the IMF - which says Greek debt is unsustainable - will
take part in the financing of its current, third bailout.
Slovakia's finance minister Peter Kazimir said at the EBRD's
annual meeting in Nicosia on Wednesday that it looks like the
IMF will take part in the financing of Greece's third bailout.
Many analysts say discussions on debt relief are unlikely to
progress until after September's national election in Germany,
the EU's largest economy and paymaster.
(Editing by Jeremy Gaunt, Gareth Jones and Toby Davis)