Aust bonds up as Greeks debate bailout

Australian bond future prices have rallied as the Greek parliament debates an austerity package which would enable it to avoid a default on its debt.

Greek MPs are debating legislation which will approve harsh austerity measures, including cuts to pensions and the minimum wage, in exchange for a 130-billion-euro ($A160.76 billion) bailout package from the European Union (EU) and the International Monetary Fund (IMF).

The legislation will also make possible a credit swap with bond-holders which would wipe about 100 billion euros ($A123.66 billion) of its 360-billion-euro ($A445.19 billion) debt.

If the legislation is not passed, the country faces a disastrous default on its debt in March and a likely exit from the euro zone.

However, the package is deeply unpopular in Greece and has been met with large scale protests while a number of government MPs have resigned in opposition to the legislation.

ANZ senior Rates Strategist Tony Morriss said concern about the Greek situation had seen Australian bond future prices rally over the weekend.

"It's really been quite a big rebound after the sell-off we've had since January," he said.

However, he said prices weakened slightly early on Monday, reflecting optimism among some traders that the package will pass the Greek parliament.

"Despite the protests and the resignations, I get the impression the market expects Greece to vote this austerity package through."

At 0830 AEDT on Monday, the March 10-year bond futures contract was trading at 95.955 (implying a yield of 4.045 per cent), up from 95.935 (4.065 per cent) on Friday.

The March three-year bond futures contract was at 96.540 (3.360 per cent), up from 96.480 (3.520 per cent).

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