Half a League Onward Rode the Six Hundred

Well you may doubt their wisdom, and you may doubt their rigour, but there’s no doubting their tenacity. This looks like being Marathon all over again.

New EUR 5 Year Mandate for Greece

The Hellenic Republic, rated A2/BBB+/BBB+, has mandated Credit Suisse, Deutsche Bank, Eurobank EFG, Goldman Sachs International, Morgan Stanley and National Bank of Greece for its forthcoming Greek Government 5-year Euro benchmark. Due 20 August 2015, the transaction will be launched and priced in the near future subject to market conditions.

And here’s how the ten year bond spread with the comparable German bund performed today.

Reuters William James described the situation as follows:

Greek plans to issue new bonds re-ignited concerns over peripheral euro zone sovereign debt on Friday and helped push benchmark German debt futures to a one-month high. The risk attached to Greece’s sovereign debt continued to dominate investor sentiment with the announcement of a syndicated issue of 3-5 billion euros causing Greek 10-year bond yield spreads over German Bunds to widen beyond 300 basis points. “The announcement that Greece are looking to issue five- or 10-years in the near future, albeit in small size, has put the periphery under pressure once again,” said Peter Chatwell, fixed income strategist at Calyon.

Other peripheral sovereigns were again affected by contagion from Greece, with Portuguese 10-year yield spreads over Bunds hitting their widest since early May.

Speaking at a conference in Athens yesterday Miranda Xafa, a prominent Greek economist and an ex Executive Board member at the IMF, said that Greece could well have a difficult time borrowing in April and May, since during these months a total of 22 billlion euros in bonds are set to mature.

“This year, we have a big expiry of bonds in April and May. With the five-year bond from 2005 and the 10-year bond issued in 2000, this concentration of maturing bonds leads to a re-financing risk.”

“The issue is that slowly, the ECB will start to withdraw its extraordinary measures for obtaining unlimited liquidity, and we will return to the system that was in effect before the crisis. This means Greek banks will have to look for alternative ways of securing liquidity, not through the ECB but through markets. In June, Greek banks will owe 28 billion euros ($39.5 billion) they have borrowed from the ECB, and it is almost certain that the total of this amount cannot be refinanced for more than a few months. If Greece’s credit rating falls below A- at the end of the year, it will mean that Greek bonds cannot be used as collateral for borrowing from the ECB.”

This entry was posted in A Fistful Of Euros, Economics: Country briefings, Economics: Currencies by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

4 thoughts on “Half a League Onward Rode the Six Hundred

  1. Pingback: Who Hid A Hundred Prophets In A Cave When Jezebel Was Trying To Kill Them? at beb9.com

  2. I think there are two points to make here about the ECB eligiblity threshold. The first one is that it is a political decision which is ultimately not that of the Ecb to make, but that of Ecofin. The ECB cannot unilaterally tell people that Greece is a second-class member of the euro area. The second point is that the ECB deadline is not that relevant at the moment anyway. The problem right now is one of liquidity and how Greece finances itself in order to avoid a Bear Stearns/Lehmans/Northern Rock scenario. This week’s bond issue will give us a lot of information on whether this is possible, but it worth remembering that the market for Greek bonds has shrunk by a lot as recent volatility has busted apart investors’ sharoe ratios etc.

    One final point – wasn’t it 300 at Thermopylae, not 600 at Marathon? The quote itself is from Tennyson’s romanticised account of the charge of the British light brigade at the battle of Balaclava. Or am I missing a bit of subtle irony?

  3. Pingback: FT Alphaville » D-Day for Greece

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