Robeco: Greek pension reform proposed
The ECB has informed Greece that passing the pension reform will constitute a key step towards the completion of the first review, which means Greek bonds can be accepted by the ECB as collateral.15.01.2016 | 13:27 Uhr
Main market events
Peripheral bonds traded more or less in line with German bonds this week. Spanish bondsunderperformed in the run up to the new bond issuance, but this quickly reversed after theoverwhelming demand for the bond. Italian bonds have returned 0.2% this year, Portuguesebonds -0.9%, Spanish bonds -0.1% and Irish bonds 0.6%.
Spain
Spain launched a new 10-year bond this week. Demand for the issue was massive, with an orderbook of over EUR 29bln. The Spanish Treasury issued EUR 9bln of this new bond and EUR 4.3blnof other bonds, which is about 11% of the total gross funding needs for the whole of 2016.Spain's 2016 budget requires extra fiscal consolidation measures in order to comply with theStability and Growth Pact. The next Spanish government will need to cover the fiscal deviation.The fact that the Catalan pro-independence parties formed a new regional government mightlead to the quick formation of a ‘grand coalition’ to respond to the Catalan secession threat.
Portugal
The EU Commission expects to receive the Portuguese 2016 draft budget in coming days, so theEurogroup can review it at its February 11 meeting. The relaxation in the fiscal position relative topreviously agreed targets is likely to face opposition in Brussels.
Greece
The ECB has informed Greece that passing the pension reform will constitute a key step towardsthe completion of the first review, which means Greek bonds can be accepted by the ECB ascollateral. This allows Greek banks to make use of cheap ECB funding (0.05% interest rate).
Robeco Euro Government Bonds
We continue to see the ECB’s QE program, the generally supportive stance of EU policy makerstowards the periphery and the improvement in growth as positives for peripheral debt. But thesepositives are partly reflected in current valuations. We remain cautious towards Spanish bonds aswe expect the political uncertainty to continue in coming months, and towards Italian bonds dueto valuations.
The fund has overweight positions in Portugal and Ireland and underweight positions in Spainand Italy. We used the Spanish auction this week to buy some Spanish bonds versus Italianbonds. We like Portuguese bonds as they benefit disproportionately from QE. Strong economicgrowth is rapidly improving the Irish debt metrics. Peripheral bonds make up 32% of the fund.Year-to-date the fund’s absolute return is 0.37%.