Why do Greece’s bond rates fall despite delays?

Why do Greece’s bond rates fall despite delays?

The markets seem to be convinced of the positive course of the Greek economy, and they do not pay attention neither to the small delay of the disbursement of the EUR 1 billion of central banks profits, nor to the recent IMF criticism in some parts of the Greek economy.

It is characteristic that the bond market in Greece has a downward trend throughout its curve despite the recent Eurogroup decision to shift the debate on the release of the Greek ANFAs/SMPs for April 5.

Therefore, they do not pay attention to the temporary delays, as it was seen by yesterday’s Eurogroup. After all, in addition to debt management and the country’s covered financing needs, Greece has already raised in the first quarter 71% of the money Athens planned to cover each year.

Positive Momentum

The positive momentum for the Greek economy from now on was also revealed by European officials in the recent Eurogroup, as well as by the recent IMF report, which is the first after the exit of Greece fro the program. Irrespective of the criticism of the IMF’s report in a number of areas, particularly on political decisions such as the minimum wage hike that do not affect markets, it notes the very positive course of the Greek economy, pointing out that Greece’s debt is sustainable for the next 10 years, which squeezes the interest rate curve down.

Especially important are the positive facts the Fund has highlighted about the Greek economy, such as the elimination of chronic deficits, the improvement of Greece’s external position, the widening of the economic recovery, the reduction of unemployment and the increase of private deposits.

“Pillow”

Beyond that, government funds are estimated at around EUR 30 billion (16% of GDP, 101% of 2019 debt service payments) by the end of 2018. This is significantly higher than in other EU countries at the time they were leaving the program and provides flexibility in the timing of additional market editions.

In particular, under the baseline, the reserve would allow the government to service its debt until the end of 2022, without further market financing, if necessary./ibna