Greece breaks three-year isolation and returns to debt markets

Alexis Tsipras: "We can now say with certainty that the economy is on the up." [DIE LINKE. in Europa/Flickr]

After three years of “exile”, Greece will return on Monday (24 July) to the international debt markets, testing the waters to see if it can begin to wean itself off bailout loans after tough reforms.

Athens “announces today that it intends to offer new euro-denominated fixed rate notes due 2022,” the finance ministry said in a statement on Monday.

“Pricing of the new notes offering is expected to occur on 25 July 2017, subject to market conditions, with settlement expected to occur on 1 August 2017,” the ministry said.

BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Merrill Lynch have been picked to handle the five-year sale, the ministry said.

Athens has also invited holders of an existing five-year bond, due in 2019, to a switch and tender offer.

“The cash purchase price to be paid for (the existing 2014 bond) will be equal to 102.6% of the nominal amount,” the ministry said.

The last time Greece issued bonds was in 2014 under the coalition government of Antonis Samaras with a yield to investors of 4.95%.

Reports in Athens suggest that the goal of current Prime Minister Alexis Tsipras is a lesser yield to 4.75%.

According to press reports in Athens, the yield on the two-year bond on the secondary market fell by 0.013% to 3.34%. On the contrary, stabilising trends were recorded for the ten-year-old bond, which was trading at 5.27%.

Greece gets credit lifeline, IMF joins bailout

Eurozone governments threw Greece another 11th-hour credit lifeline yesterday night (15 June) worth $9.5 billion and sketched new details on possible debt relief as the IMF finally offered to help out after two years of hesitation.

Greece currently has no need to draw money from the bond markets; but it is a necessary psychological milestone.

The European Stability Mechanism (ESM) will keep feeding the debt-ridden country with low interest rate loans (0.8 and 1.8%) until the end of the bailout programme in July 2018.

Earlier this month, eurozone finance ministers approved the latest €8.5bn disbursement of the bailout, just in time for Athens to meet major debt repayments.

This gives Athens the chance to test without major risks to its credibility on the markets.

The Greek economy nearly collapsed in 2010 under a mountain of debt and it had to be bailed out by its eurozone parthers three times to prevent it bringing down the single currency bloc.

The EU’s economy Commissioner, Pierre Moscovici, said ahead of visit to Athens for talks with Prime Minister Alexis Tsipras on debt relief that Greece is beginning to see the positive results from the tough austerity measures it has undertaken.

“Greece was caught up in an incredible economic and financial storm,” Moscovici told France Inter radio on Monday.

Commission says it’s time to end Greece’s excessive deficit procedure

The European Commission decided on Wednesday (12 July) to recommend that the EU Council close the excessive deficit procedure for Greece.

“Today, things are much, much better,” he said, noting that the economy was starting to grow again, unemployment had dipped and the country’s credit rating had improved.

“We had to create the conditions for (investor) confidence, which was done. Was it too tough? Probably. Was it also necessary? Likewise,” Moscovici said.

In a sign that the country is turning a corner the economy is projected to grow by 2.1% this year – after no growth at all in 2016.

The International Monetary Fund last week approved a one-year, $1.8bn loan programme for the country, but it has said it will not release any funds until the eurozone agreed on a deal to cut Greece’s colossal €314bn debt burden.

Tsipras: “The worst is clearly behind us”

In an interview with The Guardian, Greek premier Alexis Tsipras stressed, “The worst is clearly behind us.”

“We can now say with certainty that the economy is on the up … Slowly, slowly, what nobody believed could happen, will happen. We will extract the country from the crisis … and in the end that will be judged,” Tsipras pointed out.

He admitted, though, that he made “big mistakes” regarding the choice of people in key posts.

Asked whether he was referring to former finance minister Yanis Varoufakis he replied that he was the right choice for an initial strategy of “collision politics” but rejected his plan for Greece to move to another currency.

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