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Greece returns to bond market after 4-year hiatus

Published time: April 10, 2014 15:28
Reuters / John Kolesidis

Reuters / John Kolesidis

After a four year exile from the euro bond market, Greece is back. Investors bought 3 billion euro ($4.16 billion) in 5-year bonds, offering a glimmer of hope as the euro zone economy continues to crawl out of its debt crisis.

"Greece is leaving the bailout and the crisis behind," Deputy Prime Minister Evangelos Venizelos told reporters in Athens.

Orders for the April 2019 bonds with a 4.95 percent yield were oversubscribed nearly 8-fold, according to Venizelos.

Venizelos deemed the sale “a huge success” for Greece’s economy, which has a 320 billion euro debt, or roughly 175 percent of gross national production. When the credit crisis hit in 2012, Greek bonds wiped out nearly 130 billion euro from investors.

Europe’s crisis pushed borrowing costs to record highs, but Greek bonds in 2014 (as of April 9) were the best performer of 15 euro area debt markets, according to Bloomberg’s World Bond Index.

Plagued by severe austerity cuts to government spending, the reappearance of investor confidence to the region is important.

Ratings agency Moody’s has downgraded the country’s investment grade below junk status to Caa3. Fitch and Standard and Poor's rate Greece at B- level.

Greece was the first country in the euro zone to require a bailout from the International Monetary Fund, from which it has received over 248 billion euro in loans. The third, and most recent package, was 8.3 billion euros.

Police advance near red flares left by demonstrators as they clash with anti-austerity protesters and block access to the venue of the European Union Informal Meeting of Ministers for Economic and Financial affairs in Athens on April 1, 2014. (AFP Photo / Louisa Gouliamaki)

IMF, get out!

Angela Merkel, the austerity program’s biggest cheerleader, is due to arrive in Athens on Friday. Domestic politics in Germany have been split by the government’s undeterred support for its weak neighbors.

Over 20,000 protestors marched in Athens ahead of Merkel’s visit, chanting, “EU, IMF take the bailout and get out of here!”

Troika lenders forced tough austerity cuts on the Greek economy which have arguably made the economic situation worse than it was before the crisis.

Deflation remains the highest in the 18-member euro zone, dropping 2.9 percent year on year in February, and prices continue to fall as high unemployment at 28 percent remains a huge threat to recovery. Overall, euro zone inflation is at its lowest levels since November 2009, at 0.5 percent.

Just hours before the major milestone, a car bomb was detonated in front of the headquarters of the Bank of Greece, the country's central bank.

Comments (3)

 

Sissi M. 11.04.2014 08:25

Excellent analysis but nobody (that is greek) cares
The ones that are in our parliament are Zionist Jews and have other priorities (like the markets... it makes me laugh really!)

 

DoAskDoTell 10.04.2014 19:22

cont 2
Germany can do the same thing ... print euros and end the immediate crisis,

but they are cowards, caught up in the idea of the sanity of holy money which must be preserved at all cost...

Ger man financiers should wake up and ditch the sanctity of money shibboleth once and for all, if they are to avert class war, and if they hope to restructure their industries to benefit humankind (low energy intensity more appropriate for *greener energy grid, less dependency on automobile wastes...)

 

DoAskDoTell 10.04.2014 19:17

Greece should guarantee all Deposits (not bondholders, other liabilities) remaining in Greek banks and be done with it. lol

They also could re-constitute enough banking in the country to manage capital @ 500 billion Euro as a start. They would need 25 bil euros or so to capitalize a few *new* banks... They could then use the printed euros to extinguish debt as it matures, to meet redemption demands.

Th e Greeks can do this because sovereign Greece has a treasury where as the ECB does not. Greece has/is a balance sheet, liabilities can be taken upon Greece's own account if they choose to take them.

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