Greece still shut out of markets as investors get rid of T-bills too

Greece is struggling to follow the example of other eurozone countries that have emerged from bailout programs and are now comfortably able to issue short- and long-term debt on the money markets.

After the issue of a five-year bond in the summer of 2017 and seven-year paper last February, the Finance Ministry and the Public Debt Management Agency (PDMA) appear to have hit a wall in their efforts for a third issue. The unrest on international markets, particularly Italy’s and Turkey’s, and domestic challenges have kept investors away from Greek securities.

One fact that highlights the situation is that foreign investors are now net sellers of treasury bills too, as they are not taking part in new issues, and this is forcing Greek banks to absorb that T-bill surplus, edging closer to the limits that monitoring authorities have set on such holdings.

In practice, Greece has remained out of the markets for over eight months and has no new issues scheduled for the rest of this year, according to the 2019 draft budget. Athens is expected to announce its issue schedule for next year by December, and sources say it foresees some 7 billion euros being raised in 2019. It also expects the return of the profits the European Central Bank and national central banks have reaped from holding Greek bonds.

Although the issue of a 10-year bond – which American funds prefer as they seek high yields – remains the big target that would mark a return to normality – and according to Bank of Greece Deputy Governor Ioannis Mourmouras is “a matter of time” – it would make more sense for a bond of shorter maturity – say three or five years – to come first.

Banking sources tell Kathimerini that Greece is in “no man’s land” at the moment and cannot move ahead with any long-term issues.

The PDMA’s strategy is contingent on the notion that the 34 billion euros collected from the country’s cash reserves and the cash buffer agreed by last June’s Eurogroup is enough to spare Greece from having to resort to the markets.

Still, sources say the PDMA is ready to issue new paper if the opportunity arises, while the Finance Ministry’s priorities include the earlier repayment of the loans from the International Monetary Fund and the ECB.