The government's economic staff is preparing the plan for the defensive shielding of Greek bonds, in view of uncertainty and possible market turbulence in 2027, as the global government bond market is being shaken by continuous sell-offs, which have pushed up countries' borrowing costs to the highest levels since 2007.
As competent officials explain, also referring to the country's painful experience in 2010, when it became the first target of the bond market's “punishers,” based on the conditions taking shape in the markets, an increase in borrowing costs in 2027 is inevitable.
However, the main goal is to contain this increase as much as possible and keep Greek securities away from the market's crosshairs. It will be a success if Greece maintains its current position among eurozone states, as it has managed to borrow more cheaply than major European economies, such as France and Italy, maintaining lower spreads than German bonds across the entire yield curve (5–15 years).
The spread of Greek bonds
Yield difference from European counterparts of the same maturity | 23/9/2026, in basis points (bp)| Country | 5-year | 10-year | 15-year |
|---|
| GERMANY | 39 | 76 | 62 |
| SPAIN | 20 | 31 | 14 |
| ITALY | -15 | -13 | -36 |
| PORTUGAL | 24 | 40 | 25 |
| FRANCE | -26 | -27 | -52 |
| SOURCE: PDMA PROCESSING: Euro2day |
The global crisis in the bond markets found Athens in a good position this year, as everything indicates that we will avoid bond issuances with a “steep” cost. The needs for raising capital from the market have essentially been covered, which is why the Public Debt Management Agency (PDMA) canceled a small securities issuance scheduled for September (on the order of 200 million euros), which was intended more to support the liquidity of the secondary market than to cover borrowing needs.
As those responsible for debt management judged, this issuance would have been carried out at a “elevated” interest rate, and for that reason they preferred to avoid it.
Double line of defense
In view of the difficult 2027, when in addition to problematic conditions in markets worldwide (high inflation and interest rates, strong demand for capital from governments as well as from the private sector, due to AI, etc.) there is also a major political event in the eurozone with a possible reflection on the bond market (presidential elections in France), those responsible for managing Greek debt are setting up a double line of defense:
- Fewer securities issuances: Greece, according to the plan to be announced in December, is expected to lower the capital raising planned for next year from 8 billion euros this year to 7–7.25 billion euros. This is a move to reduce the supply of securities, which will constitute an important message to the market, at a time when most eurozone states—and not only—are increasing their borrowing needs. This reduction in the planned issuance of securities will be made possible, as debt management officials explain, also thanks to the large early debt repayments of 2026, among which was the early repayment of a 2.2 billion euro bond, which would have matured in 2027 and no longer needs to be refinanced with a new issuance.
- Pleasant surprises from the cash “buffer” and early debt repayment: As already happened in 2026, with the PDMA’s surprise summer announcement of an increase in early repayments, the economic staff is working toward repeating the pleasant surprises for the market that will support investment interest in bonds. According to information, at the close of the year the cash “buffer” will most likely be 2 billion euros or even more increased compared with previous estimates, while pleasant surprises are also expected regarding early debt repayments. In fact, the loans of the first memorandum (Greek Loan Facility – GLF) remain on a repayment track much earlier than 2032, and it is not excluded that they may already have been repaid in 2029.
The combination of reduced financing needs from the market and full state coffers, which allow early debt repayments, is expected to give Greek bonds an unprecedented advantage over other eurozone securities, which will be tested by multifaceted uncertainty: even before returning to the first investment grade category (“A”), something that will still take quite a few years, Greece is shaping a profile as a safer destination for capital even than major eurozone economies, such as France and Italy.
It is characteristic that even extremely conservative portfolios are showing interest in Greek securities. Relevant information was recently requested by the asset management department of the German central bank (Bundesbank).
Without this meaning that it will ultimately proceed with purchases of Greek securities, this move signals the major change in climate that has taken place: until recently, it would have required a great deal of imagination for someone to believe that the Bundesbank was interested in Greece’s once “toxic” bonds.
Global sell-off
The moves for the defensive shielding of Greek bonds are of particular importance in view of the extreme conditions taking shape globally for government bonds. In particular, government bond yields have climbed to levels not seen since 2007, as the worsening wave of sell-offs is pushing the average yield of global sovereign debt to within a breath of 4%.
According to Bloomberg data, yields in the Global Aggregate Treasuries index recorded an increase of eight basis points on Wednesday, reaching 3.99%. U.S. government bonds were the main source of these losses, as strong macroeconomic data, persistent inflation, and growing fiscal concerns are cementing expectations that interest rates will remain at high levels for a longer period of time.
It is characteristic that an auction of 5-year U.S. debt this week was recorded as the second worst since 2018, highlighting the enormous pressure Washington is under in its effort to service debt exceeding 40 trillion dollars.
In the U.S., yields on 5-year bonds exceeded 5% for the first time since 2007, while those on 10-year bonds posted the biggest jump since April 2025. Derivatives markets (swaps) have already fully priced in three interest rate increases of 0.25% for next year, while significant risk hedging is taking place even for a fourth increase.
In Europe, the European Central Bank (ECB) has already proceeded with two interest rate increases, to 2.50%, while markets estimate that the cycle of increases has not been completed. The yield on the German 10-year bond, which is the barometer for eurozone sovereign debt, has risen to the highest levels since May 2009, exceeding 3.5%. In addition, eurozone bond markets are expected to be tested in 2027 by political events, the most serious being the possible victory of Marine Le Pen in the French presidential elections.