Sunday

8th Dec 2019

Greece looking at bond market return

  • The Greek government is following the markets' "developments and trends" and was waiting for the "right moment". (Photo: Universiteitskrant Univers)

Greece is considering going back on the bond markets as early as this week, amid mixed signs from its creditors and rating agencies.

A government spokesman said last week that it was following the markets' "developments and trends" and was waiting for the "right moment".

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According to the Greek media, the government could issue a five-year bond for the first time in three years. Yields on Greek bonds are now at their lowest levels since 2014.

The selling of bonds was postponed last week and could take place this week, according to media reports.

The speculation comes as the International Monetary Fund (IMF), on Friday (21 July), approved in principle a €1.6-billion loan for Greece.

The IMF said the loan will only be disbursed "after the fund receives specific and credible assurances from Greece’s European partners, to ensure debt sustainability, and provided that Greece’s economic programme remains on track."

It is, however, the first time since the current bailout programme was agreed in 2015 that the IMF commits to participate. The decision comes after an agreement in June with eurozone finance ministers and Greece's European creditor institutions - the European Commission, the European Central Bank and the European Stability Mechanism.

After the agreement, Greece received a new €7.7-billion loan in early July, with another 800 million due in September.

The IMF said on Friday that Greek debt, at 180 percent of GDP, remains unsustainable.

"A debt strategy anchored in more realistic assumptions needs to be agreed," IMF director Christine Lagarde said in a statement. She called on Greece and its European partners to agree on a plan "soon" to "restore debt sustainability".

Also on Friday, the S&P rating agency revised its outlook for Greece from stable to positive. But it maintained its B minus rating for the country, and only gave a one-in-three probability of raising its rating in the next 12 months.

"The worst is clearly behind us," Greek prime minister Alexis Tsipras said in an interview to the Guardian newspaper on Monday.

The Greek prime minister said that "slowly, slowly", the Greek economy "is on the up" and that he "will extract the country from the crisis".

He noted that "the big breakthrough will come in August 2018, when, after eight years, we’ll emerge from the programme and international oversight."

Although the likely selling of bonds this month is mainly seen as a test to see how private investors will react, Greece's creditors have insisted that Tsipras' government should focus on the reforms required by the bailout programme.

Issuing bonds "should be part of an overall strategy where you have the completion of the third programme and the return to the market," the president of the ECB, Mario Draghi, insisted last week.

He warned that "the sound implementation of the programme and credibility are essential for restoring market confidence" and that it was "premature to talk about other things."

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