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May 28, 2017

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Greece to return to bond markets in 1st half of 2014

ATHENS -- Greece will tap bond markets in the next three months for the first time since it needed international rescue loans in 2010, the finance minister said Tuesday, hours after fellow eurozone countries agreed to release more bailout funds.

Greece has been locked out of the international bond market by high interest rates for the past four years after acknowledging in 2009 that some of its financial data had been falsified. Since 2010, the government has relied on the rescue loans and had to impose strict austerity measures to keep them coming.

Greece last issued long-term debt in April 2010 — a seven-year bond that had a 6 percent yield. Its 10-year bonds later became unaffordable, with investors asking for 30 percent interest. That rate has since fallen, however, to about 6.5 percent.

Finance Minister Yannis Stournaras said Greece would now proceed with "a small issuance of bonds, three- or five-year bonds, in the first semester of 2014." He refused to say what size the bond issuance would be or specify a date.

Greece will also post a primary surplus — a budget without taking into account interest payments on outstanding debt — of nearly 2.5 billion euros (US$3.4 billion) for 2013, Stournaras said. Having a primary surplus is key to Greece's debt relief efforts and its debt sustainability.

Earlier, finance ministers from the 18-nation eurozone agreed to release bailout funds for Greece — 8.3 billion euros (US$11.4 billion) in three doses. The first batch of 6.3 billion euros will be disbursed in time for a bond repayment in May.

Payouts of 1 billion euros each would be made in June and July, linked to the implementation of financial targets Greece has agreed to. The parliaments of some eurozone countries must ratify the payments before they are actually made, but the eurozone's decision is key to the process. The amount does not include the IMF's portion of the installment, which is paid separately.

Tuesday's approval of the release of funds comes after the completion of a months-long debt inspection by the IMF, European Central Bank and European Commission.

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