Samaras, Stournaras at odds over tapping bond market

Contacts between the prime minister’s office with foreign investors and major investment fund managers in the last few months have been particularly frequent, signalling that investors are becoming more aware of the opportunities emerging in the Greek economy. This positive climate, moreover, has prompted the PM and his advisers to remind potential investors that besides the real economy there is also the Greek bond market.

Sources suggest that Prime Minister Antonis Samaras has in recent contacts told foreign investment funds to prepare for the new issue of a Greek medium-term bond. He is said to have informed them that this may take place in the first quarter of 2014, despite the fact that Finance Minister Yannis Stournaras has put off this prospect until the end of next year.

Each has his own reasons. The finance chief does not want to risk distracting the government and the political system from the structural reform program, which is why he wants the bond issue to be put off for as long as possible. The prime minister and his staff, on the other hand, believe that the climate at this stage is particularly good for Greece and along with support from the eurozone foresee the possible confirmation of the positive course of the economy through a successful bond issue at the earliest possible date.

In fact, no one can tell with precision when Greece will enter the markets again; experts who are aware of the aforementioned talks say that this will be determined by the markets themselves. They add that there are three main factors that will lead to a decision.

The first is what investors are looking for in markets such as Greece’s. Greek bond yields may have fallen considerably in the last couple of months, reflecting the improvement of the prospects of Greek economy, but they remain high at over 8 percent. This means that potential investors will belong to a very specific category and Athens will have to woo them.

The second factor at play is the general trend in the markets. Demand is currently high for risky investments in bonds like those of countries in streamlining programs, such as Greece.

The third factor will be the progress of the Greek program. Its successful implementation and the approval of the country’s creditors will make it easier for Athens to tap the markets.

In this context Greece could issue a bond as early as next month or as late as in a year-and-a-half, market experts note. Yet even a successful issue would not mean that Greece has regained full access to the markets, a process that will take a long time indeed.