EWG gives nod for bailout tranche

Having secured 1-bln-euro sub-tranche from eurozone, Finance Ministry will proceed to 3-year debt issue By Eleni Varvitsiotis and Sotiris Nikas

The Euro Working Group meeting of senior eurozone finance ministry officials on Friday approved the disbursement of the 1-billion-euro bailout sub-tranche from the bloc to Athens following the successful completion of the six prior actions Greece had promised to fulfill as a condition for the payment.

This paves the way for a new Greek bond issue next week, which will offer a safety cushion for the state ahead of its August obligations and the official negotiations with the country’s creditors that are set to begin in September.

The Finance Ministry confirmed on Friday that the Euro Working Group “convened via videoconference and approved the installment of 1 billion euros.” According to sources, the Greek authorities had completed the six prior actions that were due at the end of May by Thursday evening.

A senior eurozone officer said on Friday in Brussels that “the competent European institutions approved the disbursement of the first sub-tranche and on Monday the governing board of the European Financial Stability Facility (EFSF) will ratify the decision for the disbursement to take place later next week.”

The same source explained that the visit by the creditors’ heads of mission to Greece next week will be of a technical character aimed at preparing for the next inspection, “which I assume will start in September, or at some point after the holidays,” he said. Creditor sources argued that the July mission is mainly intended to put pressure on Athens to complete its prior actions. “A physical presence exerts a different pressure to an e-mail exchange,” said an official in Brussels.

The implementation of the first batch of prior actions scheduled for this summer combined with the satisfactory execution of the state budget now mean that the Finance Ministry can proceed with a new issue of bonds.

The word on the market is that at sometime next week, possibly by Thursday, the ministry will issue a new, three-year bond aimed at drawing between 2.5 and 3 billion euros with an interest rate that investors estimate could be even lower than 3 percent.