Turkey’s lira wobbled near record lows against the dollar as President Tayyip Erdogan secured victory in the country’s presidential election on Sunday, extending his increasingly authoritarian rule into a third decade.
MARKETS
Greece’s Public Debt Management Agency (PDMA) announced on Friday that this Wednesday it will auction 26-week treasury bills to the amount of 625 million euros in book entry form.
Moody’s projects that Greece will post one of the largest debt reductions internationally over the next few years, stressing that the sustainability of the Greek debt is already at a much better level than that of Italy.
The Greek bond and stock markets welcomed the election result with an impressive rally on Monday, due to the stronger prospects of a functional government in Greece, with a four-year horizon and a pro-investment and pro-reform agenda, also narrowing the gap with investment grade.
Greece’s bond prices outperformed their peers on Monday as investors reckoned the outcome of general elections was unlikely to lead to a deviation from the current fiscal discipline.
Rating agencies and international analysts are eager to see post-election Greece continue on its current fiscal path and reform policy.
Ratings agencies expect the government to be formed after the second polls to follow the path of reforms and pro-growth policies, along the Greek debt sustainability path already drawn.
Losing credibility can happen in a day, but it takes years to regain it. History has also shown this – not only in Greece -– with rating agencies not hesitating to quickly downgrade a country when they see “signs” of weakness on the fiscal front.
Greece votes on Sunday in what is likely to be an inconclusive election, meaning short-term uncertainty as markets wait to see whether a coalition government or a second-round vote follows.
Standard & Poor’s refrained from granting investment grade to the Greek economy on Friday, but showed it intends to do so in its next rating action, as it upgraded Greece’s outlook from “Stable” to “Positive.”
A Mytilineos SA general shareholders’ meeting on Monday approved a board plan to raise the price ceiling of a share buyback program from 25 to 40 euros and create a special reserve up to €20 million euros to cover the company’s participation in investments included in the development law.
Cyprus launched its first sustainable bond on Tuesday as governments took advantage of high demand for such assets following weeks of wild swings in bond markets.
The country’s political landscape is different from that which in the past had fueled fears of a “Grexit,” led to capital controls and the closure of banks and the stock market.
The capitalization of PeopleCert, the first Greek unicorn, currently stands at around $3 billion, while it has had growth rates of around 36% over the last decade.
The decision of the Public Debt Management Agency to tap the markets at the exact moment the pre-election period begins and to capitalize at the same time on the improvement that has occurred in the bond market turned out to be absolutely correct.
Greece raised 2.5 billion euros ($2.7 billion) on Wednesday with strong demand for a new 5-year bond, the day after Greek Prime Minister Kyriakos Mitsotakis called elections in late May.
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