Pressure on spread, but not on Athens

The local bond market suffered considerable pressure from the very start in the new year, with the spread between Greece?s 10-year bond and the benchmark German bund growing from that seen last Friday.

The Greek spread rose to 980 basis points on Monday from 965 bps on Friday, while there was a similar widening of the Portuguese spread.

Markets are awaiting the decisions of credit rating agencies, the issuing of Greek Treasury bills next week and developments on the European level regarding the issuing of a eurobond and the support mechanism. The Financial Times argued yesterday that eurozone states will attempt to draw some 80 billion euros from the markets within January, which has led to fresh concern.

This month?s obligations for Athens amount to 4.5 billion euros, with the current balance in the state coffers at 5.7 billion.

On January 11, Greece will sell six-month bonds, with three-month bills to follow on January 18. The Finance Ministry estimates that net loan needs this month stand at 1.5 billion euros, which can easily be covered, hence there is no worry on the part of the government about this month?s T-bill issues.

It is going to be much harder in March, though, when Athens will have to pay back 10.5 billion euros. All hopes are pinned on the disbursement of the third installment from its international lenders to the amount of 15 billion euros, which explains the urge to promote all the reforms listed in the updated memorandum between the government, the European Commission, the European Central Bank and the International Monetary Fund.

Meanwhile on Monday the Bank of Greece announced a new drop in the deposits of Greek households and enterprises in November 2010.

Their total amount reached 208.8 billion euros, down 29.1 billion from a year earlier, while the drop from October 2010 came to 2.2 billion euros.