Greece returns to the bond markets, moving towards bailout exit

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Greece returns to the bond markets, moving towards bailout exit

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Greece has taken tentative steps towards restoring its finances to normal after years of bailout loans.

For the first time in four years, Athens has sold long-term government bonds to investors – three billion euros worth – to be repaid in five years time.

Investors, attracted by the relatively high interest rates of almost five percent, clamoured for the bonds in a de facto vote of confident in Greece’s economic future.

The sale comes just two years after Greece looked set for a messy default on its debts and exit from the euro and Athens is testing the water for further bond sales as it moves to exit from an EU/IMF bailout.

Greek Finance Minister Yannis Stournaras hailed it as a new beginning saying: “From here on, our next move is to use all the means at our disposal to promote growth, to create new jobs, and to give hope and prospects to the people of this country who have suffered the consequences of the crisis and the reforms.”

Uncertainty continues

Greece is, however, a long way from being out of the woods, even with 80 percent its debt in official hands – the EU and International Monetary Fund – at very low interest rates and on a long repayment schedule.

Sarah Hewin, Senior Economist at Standard Chartered Bank gave her opinion on the bond issue: “To a certain extent it is a publicity exercise. Greece continues to be supported by the troika and received its most recent bailout tranche. The large portion of debt is held by official investors and there is still the question mark over whether that officially held debt will needs to be restructured at some point.”

Ordinary Greeks continue to protest against the austerity measures they blame for devastating the country’s economy, but which have also made it possible for Athens to start borrowing again.

Symela Touchtidou, the euronews business desk reporter in Athens concluded: “Greece has successfully passed the first markets test. Now the question is how this success will be transfered into the real economy so that the country can leave behind the debt crisis. Financial consolidation has paved the way into the markets but it must be followed by growth to end the social crisis.”