Greece's prime minister is braced for a confidence vote on Friday to force lawmakers to back his plans to exit an international bailout program early.
Antonis Samaras' government is hoping to win today's vote and thus dispel investors' fears of political instability in the country. Samaras' government has been plagued by the prospect of snap elections early next year if the prime minister fails to gain the support of opposition lawmakers for his candidate for president in elections early next year. A promise to exit the painful program early could be key in securing that backing.
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A potential early exit from the bailout program -- which imposed tough austerity measures on the country -- has already rattled investors' nerves however.
Greek bond yields rose to a six-month high this week ahead of Friday's confidence vote in parliament. The yield on 10-year paper currently stands at around 6.6 percent.
Greece is hoping to be able to meet its funding needs through the debt markets, rather than call on the Troika of lenders - the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF).
Demand has been getting stronger for Greek paper since the country returned to capital markets earlier this year after a four-year exile. But many analysts remain concerned about the country's ability to fund itself without the help of its partners.
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"At current levels, Greece would at the very least need a large credit line. S&P also stated that it does not expect Greece to be able to sell 43 billion euros of instruments over the next 15 months some days ago", David Schnautz, a director of interest rate strategy at Commerzbank told CNBC.
A smart bet?
On the other hand, and despite the risk of snap elections early next year, investors don't want to give up on the Greek bet just yet.
"It's a very difficult situation but investors will be wary of being short Greek debt or underweight just in case the ECB undertakes QE (quantitative easing)", says Gary Jenkins, Chief Credit Strategist at LNG Capital.
Monetary easing by the ECB would push up the price of Greek bonds, which moves inversely to yields.
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ECB President Mario Draghi announced last week that the bank would include Greek assets in its asset-backed security and covered bonds purchase program, despite the country's debt rating which is in junk territory, as long as there was a European program in place.