BUSINESS

Gradual return to the markets with a 5-year bond

By Sotiris Nikas

Alternate Finance Minister Christos Staikouras laid out Greece’s gradual return to international money markets in Parliament on Thursday, citing the issue of a new five-year bond as an example.

Staikouras stated that the ministry is aiming to strengthen liquidity in the Greek bond market, including through bond exchanges. In addition he claimed that the government is making plans for a series of other portfolio management moves concerning existing issues in order to improve cash flow and for further reductions in the cost of borrowing, also aimed at the country’s gradual return to the capital markets.

In this context Staikouras said that “the gradual return to markets with the issuing of a medium-term maturity [e.g. five years] and with sufficient liquidity will contribute to the decline in the yields of all forms of state debt, resulting in enterprises being able to borrow funds at a more reasonable cost.”

Meanwhile, investment firm Nomura presented on Thursday three alternative scenarios for the future of Greece and its funding, suggesting that the country’s needs could range from 13 to 28 billion euros up to 2018. The scenarios are all based on the assumption that the privatizations program will reach at least 50 percent of its target.

The first scenario provides for a full return to the capital markets, taking the country’s needs to 28 billion euros; the second concerns a partial tapping of markets for the drawing of 9 billion euros if the country drops out of the International Monetary Fund’s program at end-2014 with needs amounting to 25 billion euros; and the third is against tapping the markets, with all 13 billion euros needed being covered by the country’s creditors.

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