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A modest harvest for the last issue of government bonds

31 March 2010 / 09:03:31  GRReporter
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The forecasts of the analyzers regarding the progress of the Greek economy are becoming darker and darker, providing for two scenarios. The first one is pessimistic and according to it the country will not be able to reform and the widely advertised by the Prime Minister George Papandreou rehabilitation measures will not be carried out. The country will declare bankruptcy and then it will be left in the hands of the International monetary fund. The second scenario is the optimistic one, according to which the reforms in Greece will be successful, however they will lead Greece in such a deep recession, that exiting from it would not be possible without external support.

“If Greece turns to the International monetary fund, we will help it, however the conditions under which this will happen will be our conditions and the program which will be applied in Greece will be our program. We will act in the same way we do for each one of our members”, said the executive director of the organization Dominic Stross-Kan for the Bloomberg agency. His statement caused confusion within the Greek government and opened disapproval on the part of the Greek media. Even the reassuring assessment of the credit rating agency Fitch that most probably in the next few months the negative perspective of the Greek economy will be replaced by a positive one, did not calm down the media.  

The tension was actually caused by the unsuccessful issue of government bonds with 20 years term and at a total value of 1 billion euro, which were only sold for 390 million at a very high interest of 6 per cent. Yesterday the Greek government bonds with 7 years term were met with reserves by the international markets which still bought the at an interest of 5,9 percent. The surprising issuing from today was totally unsuccessful. It is expected that Greece will turn to the international markets again on April 13th and 20th. Meanwhile the Organisations for management of the foreign debt of Greece announced that between April 7th and 14th it will issue government bonds which could be bought by private people. The bonds will have a 7 years term and will be sold at an interest of 5,9 per cent. In the procedure could take part everybody who wishes to do so, who has a personal ID card and a tax number registered in Greece and who has registered as an investor in the banks or in the investment funds.

The collapse of the new issue of Greek bonds again shot the spread index in the air and for the first time in the past week it reached 338 points for the bonds with 10 years term. The CDS insurances reached 327,500 euro while on Monday they were 303,500 euro. In April and May the Greek government will have to pay a total of 24 billion euro for government bonds which were sold in the past.

There was no way that the unfavorable reaction of the international markets did not affect the Athens stock exchange which index was decreasing when it closed down. The index lost 1,76% and ended the day at 2099,65 points and the banking index was affected the most. It lost 2,31 per cent of its value. The most losses were suffered by the National Bank of Greece – 2,34 per cent, followed by Alpha Bank – 2,16 percent.

Tags: economic crisis Greek government bonds markets prices interest rates stock news
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