LONDON: German Bund futures opened higher on Monday as the relief spurred by Greece's debt restructuring faded and was replaced by concerns about growth and whether the crisis may flare up in the euro zone's other weak economies.
June Bund futures rose 22 ticks to 138.72, edging to within 6 ticks of the contract high, with investor focus switching to whether a fragile growth outlook could derail debt-laden Portugal, and cause fresh worries in Spain and Italy.
"Bunds don't want to lie down. We're now going to have a look at Portugal and then Spain, we're moving on to bigger growth concerns," a trader said.
Greece on Friday took final steps towards restructuring its debt, using legislation to force remaining private creditors to swap their Greek debt for new bonds worth considerably less. The bond exchange paves the way for Greece to receive bailout funding necessary to avoid a disorderly default.
Late on Friday, the International Swaps and Derivatives Association concluded that the debt swap constituted a credit event and will trigger payment on credit default swap (CDS) insurance contracts.
"Fears about unknown repercussions should underpin to risk aversion near-term, but we hold on to our view that the CDS process does not represent a systemic risk," Commerzbank strategists said in a note.
On Friday, new Greek bonds were already trading at high yields in the pre-issue grey market, reflecting investors' view that the country faces an uphill struggle to meet the terms of its bailout and get its economy back on track.
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