15 April 2014

Greece returns to bond markets, says end of bailout nears

Two years after nearly having to leave the eurozone, Greece returned to the bond market on Thursday with investors hungry for high returns scooping up its debt in a €3 billion deal that could mark the beginning of the end of its bailout, reported Reuters.

Athens offered a yield of 4.95 per cent to sell five-year bonds, the second lowest borrowing costs for a bailed-out eurozone state returning to the market. The bonds, the first sold by the Greek government since the EU and IMF rescued it four years ago, attracted more than €20 billion of interest from over 550 investors, including €1.3 billion from the banks which are lead managing the deal.

Greek bonds attracted investors because they offer a relatively high return in an era of ultra-low interest rates. Expectations that the ECB will take further steps to boost the eurozone economy are also fuelling appetite for bonds issued by the bloc's riskier countries.

Greece's government said the sale marked the beginning of the end of the tough austerity linked to the €237 billion bailout. Athens considers the sale as part of a gradual return to markets. It does not expect to cover all its funding needs from investors before 2016.

Poul Thomsen, head of the IMF’s mission to Greece, told Mega TV, "In our view, Greece's bailout is not fully financed the whole way to 2016 and one would need...to find some more money". Separately, Greek Prime Minister Antonis Samaras wrote in Kathimerini on Sunday that "the country’s return to the markets rebuffs speculation" about the need for a third bailout.

The country's creditors welcomed the move back to the markets, saying it vindicated the tough economic policies endured by the Greek people and would bolster sentiment throughout. The day after Greece's return to the market, Angela Merkel visited Athens to show a sign of support for Greece's reforms, Deutsche Welle reported.

However, think tank analyst George Tzogopoulos from The Hellenic Foundation for European and Foreign Policy (ELIAMEP), was less enthusiastic: "Markets may in fact view Berlin's support as a kind of loan guarantee - especially since many of the promised reforms in Greece have already been implemented - but political symbolism is not enough", he told Deutsche Welle.

Ekathimerini reported that Greece’s primary budget surplus last year came to €3.38 billion, according to figures that the Hellenic Statistical Authority (ELSTAT) paving the way for the adoption of extra measures to lighten Greece’s debt load.

The Wall Street Journal pointed out that new figures from the Greek Finance Ministry show that Greece’s primary budget surplus reached €1.57 billion in the first quarter of 2014 – beating the government’s target of €878 million.

Meanwhile as European elections near, Syriza has made its first TV election video called "We vote, they leave" reflecting the party's view of the European and local elections as a referendum of sorts on austerity and the government's performance, reported Enet.

Current polls show Syriza leading: Syriza 19.9%, New Democracy 19.7%, Potami 9.2%, GoldenDawn 8.2%, Communist Party of Greece (KKE) 6.1%, Elia/Pasok 5.3%, Independent Greeks 4%, Democratic Left 2.7%.