Greece planning cautious return to bond markets in 2017

ATHENS, Greece – Greece is planning a gradual return to international debt markets next year, a senior Finance Ministry said Thursday.

George Houliarakis, a deputy finance minister, said the decision would hinge on a return to economic growth in 2017 — as forecast by the European Union — and a continued drop in sovereign borrowing rates.

Greece has been locked out of debt markets since 2010, with a brief return two years ago.

Interest rates on Greek government bonds have eased after Athens and eurozone rescue lenders ended months of delays in reviewing the country’s bailout program.

“Regarding our return to the markets, it’s our view that as soon as the economy is stabilized and begins to recover … it will occur slowly in 2017,” Houliarakis said.

“Our aim is not to return quickly but to build trust. We don’t want to rush back in just so we can celebrate.”

European lenders agreed early Wednesday to unfreeze more rescue loans and to consider debt relief, days after Greece’s left-wing government passed a massive new round of austerity measures that include across-the-board tax hikes.

Hours after agreement was reached, Fitch ratings agency said the disbursement of 10.3 billion euros meant that Greece would not face difficulties in debt repayment over the summer.

“The agreement … reduces the risk of another Greek liquidity crisis this summer, and incentivizes the country to complete its third bailout program,” Fitch said.

“However, with little debt relief offered upfront, the Greek government may find it progressively more difficult to continue with politically controversial measures required to meet ambitious program commitments.”

Greece has continued to sell short-term debt since receiving its first bailout loans in 2010, but interest rates on government bonds have remained astronomically high.

The previous conservative government raised 3 billion euros in April 2014 with a one-off sale of five-year bonds. But the auction was followed by months of political uncertainty that saw the Greek economy return to the brink of collapse last year.

Interest on 10-year government bonds has dropped to its lowest level this year at 7.2 per cent, down from 11.6 per cent in February.


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