Gov’t to seek help from banks for a new bond issue

Having practically been excluded from the money markets since February, the Greek government is now seeking support from local banks so it can issue a new bond.

Athens is trying to persuade the European Central Bank to agree to the relaxation of Greek systemic banks’ limits on purchases of the country’s sovereign bonds, citing the end of the bailout program and Greece’s non-participation in the ECB’s bond-buying program.

Sources said that Prime Minister Alexis Tsipras raised the issue during a meeting with ECB President Mario Draghi on Thursday in Brussels.

Relaxing those limits, combined with the issuing of a 3- or 5-year bond, would have multiple benefits for the government as well as the banks.

A senior banking official told Kathimerini that raising that ceiling would help the country as banks would improve liquidity (and possibly yields too) in the bond market by purchasing a new issue, and benefit from the increase in interest revenues. Furthermore, if bond prices recover in the future, banks will register profits.

JP Morgan said in a report that at the International Monetary Fund meeting in Bali last week Greek officials expressed the desire for banks to have their limit raised so they could acquire state bonds and boost liquidity.