Wednesday October 1, 2014 Search
Weather | Athens
28o C
16o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Bundesbank rejects Greek bonds

 German central bank refuses debt from countries in bailout programs as collateral for liquidity

By Sotiris Nikas

Greek bonds are increasingly becoming worthless, which may well further delay Greece’s return to the markets, as Germany’s central bank is now refusing to accept the bonds of countries in bailout programs as collateral, according to a press report in Germany.

Up until this week Greek bonds had been used by banks to draw liquidity from eurozone central banks and the European Central Bank. However, the ECB announced on March 21 that it was giving eurozone member states’ national central banks the right to reject bonds of banks guaranteed by states that are in European Union and International Monetary Fund reform programs: Greece, Portugal and Ireland, for the time being.

In this context, the Bundesbank has become the first of the eurozone’s 17 central banks to refuse these countries’ bonds as collateral, according to a report in Friday’s Frankfurter Allgemeine Zeitung. This means that as of May, the German central bank will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral.

The German daily adds that the Bundesbank has just under 500 million euros invested in Greek, Irish and Portuguese bonds.

The development is very serious as it means that even the new bonds issued by Athens to replace the old ones after the private sector involvement in the haircut will have too low a value. Already their difference in yield compared to German bunds, known as spread, has grown by more than 200 basis points in fewer than 20 days, climbing to 1,940 bps.

Consequently the Greek bond market, and therefore the country’s economy, will remain under great pressure, the negative climate will be even harder to reverse, and Greece’s return to the market will be further delayed. It also means that the credibility of the new bonds issued is no different to that of the old ones they have replaced.

What is more, Greek banks will need to gradually seek funding from other sources and not the Eurosystem, which is not at all an easy proposition.

ekathimerini.com , Friday March 30, 2012 (23:01)  
Greek factory activity returns to contraction in September - PMI
Mario Draghi to push ECB to buy Greek, Cypriot ´junk´ loans: FT
NBG Pangaea eyes listing on foreign bourse, huge portfolio
Out-of-control unpaid bills bring PPC to its knees
Demolition of uninhabited homes at Roma camp goes ahead
Authorities on Wednesday went ahead with the contentious demolition of 12 uninhabited residences at a Roma camp in the northern Athenian suburb of Halandri but have postponed the relocation ...
New suburban railway station opens in Athens suburb of Tavros
Transport Minister Michalis Chrysochoidis on Wednesday inaugurated a new station on the Athens-Piraeus Proastiakos suburban railway line. The new station in Tavros, near Athens's southern co...
Inside News
SOCCER
All team sports suspended next weekend in memory of dead fan
The government announced on Monday the suspension of all team sports events in Greece scheduled for next weekend, October 4 and 5, in the memory of the Ethnikos Piraeus fan who died a few ho...
SOCCER
Karamanos punishes Michel for deeming him surplus
Atromitos forced Olympiakos’s first loss this season in all competitions on Saturday to allow PAOK to go alone on top of the Super League table on Sunday. Odds-on title favorite Olympiakos l...
Inside Sports
COMMENTARY
Truth before the battle
The coalition has lost its sense of direction in the last few months. Exactly where things went off track is not the question at this stage. What is certain is that if it continues competing...
EDITORIAL
Bending the rules
The flexibility with which laws are implemented has been a fundamental cause for concern in Greece during the post-dictatorship era. Everything becomes a subject for negotiation, even in cas...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Greek factory activity returns to contraction in September - PMI
2. Demolition of uninhabited homes at Roma camp goes ahead
3. Mario Draghi to push ECB to buy Greek, Cypriot ´junk´ loans: FT
4. New suburban railway station opens in Athens suburb of Tavros
5. Thessaloniki transport gets more expensive
6. Smallpox decimates sheep stocks in northern Greece
more news
Today
This Week
1. Air-raid sirens to go off all over Greece at 11 a.m. in drill
2. Smallpox decimates sheep stocks in northern Greece
3. Truth before the battle
4. Thessaloniki transport gets more expensive
5. Bending the rules
6. Mario Draghi to push ECB to buy Greek, Cypriot 'junk' loans: FT
Today
This Week
1. Greece may opt for unusual president to avoid snap polls, Venizelos says
2. Woman allegedly buried alive by accident in northern Greece
3. Salaries in Greece continue to slide, dipping 1.4 pct in Q2
4. Should you bet with Kissinger on where the world is heading?
5. Cypriots divided by 1974 war seek Shariah hub
6. The shocking thought of euro-dollar parity
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.