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Eurogroup clears tranches, Greece eyes bond issue

Finance Minister Yannis Stournaras (l) and European Economic and Monetary Affairs Commissioner Olli Rehn (r) discuss issues at Tuesday’s Eurogroup as German Finance Minister Wolfgang Schaeuble ponders something in the background.

Eurozone officials meeting in Athens on Tuesday approved the release of 8.3 billion euros in rescue loans, to be disbursed in three tranches, as Greek Finance Minister Yannis Stournaras indicated that a return to the bond markets was on the cards.

Addressing a news conference after talks with eurozone finance ministers, Eurogroup President Jeroen Dijsselbloem confirmed that a troika review that had dragged on for seven months “can now conclude” and that pending rescue funding to Greece can be disbursed. “This has been an arduous process but we have now a positive outcome,” Dijsselbloem said.

The money is to be disbursed in three tranches – a first installment of 6.3 billion euros by the end of April, with another two tranches each worth 1 billion to be paid out in June and July respectively. The first installment of 6.3 billion euros, along with another 3.4 billion the International Monetary Fund is expected to release, will allow Athens to cover some 9 billion euros in bonds expiring in May.

Eurogroup officials said that the 6.3 billion euros was dependent on Athens implementing reforms in a multi-bill voted through Parliament on Sunday. The two additional loans were linked to six “milestones” each which have already been agreed between Greek authorities and the troika, officials on both sides said.

Officials also touched on prospects for talks on Greek debt relief, noting that a date for discussions could be set once the European Commission’s statistics service, Eurostat, confirms Greek predictions of a primary surplus. Asked about the outlook for Greece returning to capital markets, European Economic and Monetary Affairs Commissioner Olli Rehn said such a move could happen “at some point in the relatively near future.”

At an informal meeting of European Union finance ministers, or Ecofin, that followed the Eurogroup, Stournaras confirmed that the government is preparing to return to international bond markets. He said that there would be an offering before the end of June and that the note would have a maturity of three to five years.

Sources told Kathimerini that the government is hoping it will be able to auction a sovereign bond before Easter. It is likely that Athens will seek to borrow between 1.5 and 2 billion from the markets in the first stage and then follow this up with further offerings of 2 to 3 billion later in the year to refinance existing debt.

The coalition is also planning to draw on an estimated 1.3 billion euros in reserves that have been collected at various public bodies, which along with the capital raised from the bond issues would mean that Greece would need no further funding for 2014. This would also mean the government achieving its goal of avoiding a third bailout.

“I have taken note of the optimism, or, let’s say the ambition, of the Greek government not to have another program. Of course I would like to share that ambition, yet I think it’s too early to say,” Dijsselbloem said.

Speaking from the island of Syros, SYRIZA leader Alexis Tsipras dismissed the government’s position that Tuesday’s events were an indication that Greece is returning to “normality.” He pointed to Dijsselbloem’s comment as an indication that Greece could yet be forced to agree to a third bailout “on the troika’s terms.” Speaking on Skai TV, SYRIZA’s spokesman for development issues, Giorgos Stathakis, insisted that Greece would still need substantial debt relief as it would not be able to meet repayments of 82 billion euros by 2020 just from primary surpluses and money raised from privatizations.

On Tuesday evening an anti-austerity demonstration in the city center outside the area cordoned off by police for the Eurogroup summit was marred by small-scale clashes between protesters and police who fired pepper spray to disperse the crowd.

ekathimerini.com , Tuesday April 1, 2014 (21:30)  
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