Stournaras says bonds can wait
Bank of Greece Governor Yannis Stournaras has distanced himself from the government’s plan for an immediate return to the bond markets, arguing on Tuesday that it is “rather early” and saying that two or three landmark privatizations must be completed first to regain investor confidence.
According to the scenarios making the rounds in Europe on Tuesday, the most likely dates for the Greek bond issue are July 17 and 19, since on July 20 – instead of July 27 as originally announced – the Executive Council of the International Monetary Fund will meet to decide on the approval of a new loan agreement with Greece. Market professionals say this may be related to the information that Greece would attempt a trial bond issue by July 21 by swapping the bonds issued in April 2014 with new five-year paper.
However, Stournaras told The Wall Street Journal in an interview on Tuesday that Greece’s capacity to return to the markets “remains to be seen.”
“I think it’s a bit early. There are steps in the right direction but it is only the beginning. I think it would be even better, for instance, if Greece proceeds with two or three emblematic privatizations in the period to come. That would be more helpful to tap markets later,” he said.
The central banker went on to argue that Greece will have to do more, particularly regarding the planning of the future and the privatizations. Sources say Stournaras considers as “landmark” sell-offs the privatization projects of Hellenic Petroleum, of OTE telecom and of Athens International Airport.
Last month, Finance Minister Euclid Tsakalotos met in London with investors and one of them, BlueBay Asset Management, told Reuters on Tuesday that “in recent months we used to have one phone call from bankers on Greece every two weeks, but in the last 10 days every day a banker will call to ask about Greece.
“One realizes we have got to a point showing something will happen immediately. We would expect the country to hit the market within the next couple of weeks,” he said.
