Never mind Apple or the other so-called FANG stocks. One of the best winners for US investors in 2017 was Greek government bonds. According to a Risky Finance analysis of iBoxx data, Greek debt earned a dollar return of 66 per cent during the year. That not only beats Apple’s 43 per cent stock price return, but also top emerging market bond performers such as Angola, Bulgaria or El Salvador whose returns were in the mid-20s.
True, if it hadn’t been for the strengthening of the euro against the dollar, Greece’s return would have been neck-and-neck with Apple at 43 per cent. But that’s still respectable for a country which until recently was considered a basket case, and which still has a B- or CCC rating.
There are a couple of other similarities between Europe’s cradle of democracy and the Cupertino-based iPhone maker. Apple’s $229 billion annual net sales are almost the same as Greece’s gross domestic product. And if you had bought Greek bonds at the start of 2015, your dollar return would be around 125 per cent, not far behind Apple’s return over the same period.
The similarities end there, not least in the difference between the broad investor base in Apple’s $920 billion equity capitalisation and the select group of investors that own €35 billion of Greek publicly traded debt. These bonds are dwarfed by the €280 billion of debt owned by official sector creditors.
As we wrote a couple of months ago, Greece turned a corner in 2017, earning a positive report from its EU creditors. This helped smooth the way for a debt swap in November, which although fiscally neutral, allowed Greece to consolidate its debt into a more liquid form. But official sector debt relief hasn’t happened.
The market’s reaction seems to have been a shrug. That may be partly due to Paul Kazarian, the biggest single holder of Greek bonds, who fought a noisy campaign to see debt relief reflected in Greece’s official accounts. That campaign went nowhere, but in PR terms was a victory because it helped build a consensus that debt relief was already there in all but name.
So while Kazarian likes to call himself a ‘friend of Greece’, Greece has in financial terms unquestionably proved itself a friend of Kazarian.