Investors sell off Greek bonds as IMF and EU fail to reach bailout deal

2-year bond yields hit eight month high

Yields on two-year Greek bonds rose to their highest level since June 2016 yesterday as the International Monetary Fund (IMF) and European Union (EU) failed to reach an agreement on lending the €7bn the country needs to avoid bankruptcy.

The Financial Times reports the IMF refuses to sign up to the aid programme unless the EU grants further debt relief to Greece. However, the head of the eurozone's €500bn rescue fund has rejected this demand. Although the debt does not need to be paid off until July this year, eurozone ministers are keen to reach an agreement by mid-February in order to avoid the issue becoming politicised by the Dutch, French and potentially Italian elections, according to the FT. An EU group of governments has also said Greece should maintain a primary surplus (the amount a country takes in, minus e...