Treasurys Kick Off December on Down Note
NEW YORK--Treasurys started December with a slight decline as details of Greece's bond buyback plan encouraged investors to seek better returns through riskier assets.</br></br>Less than a week after its international creditors finalized terms to fresh financial aid, Greece set in motion one leg of the broader debt-reduction requirements with plans to buy back about half of its debt owned by private creditors. Greece will spend about [euro]10 billion ($13 billion) to buy back debt, offering a maximum price of between 32.2% and 40.1% of the face value of the debt--more than what most expected.</br></br>Goldman Sachs expects the indicated pricing to draw enough participants to make the buyback successful. The program's success is vital as it is estimated to contribute about 11 percentage points of the debt reduction as a proportion of gross domestic product.</br></br>Greek and other peripheral European bonds rallied, sapping demand for the perceived safety of U.S. and German debt. But the selling in U.S. Treasurys was relatively measured. While investors say specifics to the buyback are encouraging, Greece's long-term growth picture remains dim.</br></br>"We're going to be talking about Greece again this time next year," said Oliver Pursche, co-portfolio manager of the GMG Defensive Beta Fund. "It's a Band-Aid to avoid disaster in the next few months, then they'll need to cover it with another Band-Aid."