Greece may have passed a milestone and its bond market has been lucrative for some investors, but the road to recovery doesn’t look much shorter.
The yield on Greek 10-year bonds fell below 7 percent — the threshold where countries were forced to seek aid during the European debt crisis — for the first time since November after creditors agreed to release 10.3 billion euros ($11.5 billion) and pledged to reduce the debt burden down the line. Greece has delivered the highest returns of all euro region sovereign debt tracked by Bloomberg’s World Bond Indexes this year.
The question is whether the nation and its economy can endure yet another squeeze. While the latest deal avoids another summer standoff over finances, austerity measures equal to 3 percent of gross domestic product will kick in from June, further dampening economic activity in a country where almost a quarter of the workforce is without a job.