Is now the time to snap up Greek debt?

London-based investment manager Exotix - the emerging and frontier markets specialist - is urging clients to buy into Greek debt and the country's stock market before it reaches a deal with creditors.

Greece and its bondholders have so far failed to agree to reduce the existing debt to help Greece avoid bankruptcy,  with no resolution over what scale of haircut Greek debtholders should take.

The stand-off has continued to weigh on markets, while bond yields on Greek debt have remained at extreme levels, as the debate drags on about how to keep Greece within the eurozone.

However, Exotix said the current situation presents a compelling, if somewhat risky, investment opportunity.

Peter Bartlett, managing director of Exotix, said investors should be looking at both Greek bonds and equities, as both asset classes are trading at ‘shockingly low' levels.

"It is the right time for investors to be exploring investment opportunities in Greece as there is a good chance that a rescheduling will be agreed before the March deadline," he said.

"Our experience of other crisis economies has taught us that often the rewarding opportunities fall to the early investors.

Valuations on Greek equities have tanked amid the crisis. Bartlett said the Athex index has fallen by a factor of seven, from a market cap of €171bn to less than €25bn.

The fall means the market cap is now equivalent to just 11% of Greek GDP, compared to most developed countries which have market capitalisation/GDP ratio of 50-100%.

Despite Exotix's bullish view, investors continue to avoid Greece, with yields on 10-yr government bonds currently at 33.64%, a premium of more than 31% over gilts and treasuries.

This article first appeared in Investment Week's sister title Investment Europe