Greece returns to capital markets as bond sale is officially announced

Greece returns to capital markets as bond sale is officially announced


By Lefteris Yallouros – Athens

The Greek Finance Ministry announced the country’s return to capital markets Wednesday, for the first time in almost four years.

Greece has mandated international banks (Bank of America, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan and Morgan Stanley) for an upcoming five-year bond issue denominated in euros and under UK law. The country will return to international markets with a five-year note on Thursday, seeking to tap investors for EUR 2.5 billion. Book building will begin Thursday, the Finance Ministry confirmed. The yield is expected to reach between 5 and 5.25 percent.

On Wednesday, the yield on Greece’s 10-year bonds fell below 6 percent for the first time since 2010.

The country’s return to capital markets was not greeted with the same enthusiasm across the political spectrum in Greece. For the government it is considered a great success and the beginning of a new era for the country. Prime Minister Antonis Samaras hopes to send a strong message that his government’s economic policies have put the country back on track and the economy is recovering well. It is also hoped that it will pave the way for debt relief after European Parliament elections in May.

Coupled by a large primary surplus, it is anticipated Greece’s European counterparts will deliver on their pledge to help relieve Greece of its large sovereign debt. Encouragingly enough, it was also announced Wednesday the the general government’s primary surplus totaled 3.5 billion euros in the first two months of 2014, sharply up from 1.4 billion euros in the corresponding period in 2013.

Opposition parties on the other hand greeted the news with skepticism. Main opposition party leader Alexis Tsipras argues the return to the markets is politically driven. Coalition of the Radical Left (SYRIZA) spokesman Panos Skourletis said it was a “staged, expensive return to the markets for pre-election reasons” while the Democratic Left Party (DIMAR) issued an announcement voicing similar views, saying that the move was “rushed and serves pre-election priorities.”

Government spokesman Simos Kedikoglou said accessing capital markets again was “an important step in Greece’s effort to fully exit the crisis”. He also criticized SYRIZA leader Alexis Tsipras saying he “wants us to remain in the memorandum so he has a reason to exist.”

On behalf of the International Monetary Fund, Poul Thomsen said the country’s return was an important milestone and proof of the success of the IMF-EU-ECB sponsored adjustment program. No doubt German Chancellor Angela Merkel, due to arrive in Athens this week, will share this view. From a political standpoint, in any case, the success of Greece’s return to capital markets was by no means smooth. Greek protestors launching the first anti-austerity strike of the year Wednesday was surely a reminder to the country’s government as well as its European allies that Greeks consider the return to markets be of little consequence to their every-day lives as they fight with austerity and sky-high unemployment.