Bond is­sue is shelved for now

Gov’t de­cides to wait for the IMF’s debt sus­tain­abil­ity anal­y­sis and the im­pact it will have on the mar­kets

Kathimerini English - - Focus - BY VASSILIS ZIRAS & ANESTIS DOKAS

The gov­ern­ment is freez­ing its plans for a bond is­sue that was sched­uled to take place yes­ter­day or to­day. Fol­low­ing a se­ries of meet­ings over the week­end, it de­cided to de­lay the trial re­turn to the mar­kets un­til the In­ter­na­tional Mon­e­tary Fund pub­lishes its debt sus­tain­abil­ity anal­y­sis (DSA).

Gov­ern­ment sources re­sponded yes­ter­day to re­ports about the is­sue be­ing “a mat­ter of hours,” say­ing that “no such de­ci­sion has been made.” The gov­ern­ment is closely mon­i­tor­ing de­vel­op­ments in the bond mar­kets and will de­cide about the most ap­pro­pri­ate time for its re­turn, “not based on ru­mors but ex­clu­sively on the op­ti­mum man­age­ment of the Greek pub­lic debt,” they said.

The orig­i­nal plan, ac­cord­ing to what IMF Man­ag­ing Direc­tor Chris- tine La­garde had said, pro­vided for the Fund’s Ex­ec­u­tive Coun­cil to con­vene on July 27 so as to de­cide on the IMF’s par­tic­i­pa­tion in prin­ci­ple in the Greek pro­gram. It would also is­sue its DSA. The Fund, how­ever, later brought for­ward the meet­ing to this Thurs­day.

There­fore, given that the space of time be­tween the bond is­sue and the DSA would have been just a few days, it was deemed ap­pro­pri­ate to de­lay the trial is­sue in re­spect of the in- vestors, and the cred­i­bil­ity of the coun­try and the process.

What im­pact the DSA will have on the mar­kets re­mains un­known. It will ob­vi­ously sur­prise no one that the Greek debt will be deemed un­sus­tain­able. What will be rather sur­pris­ing will be the fact the Fund is not chang­ing any­thing re­gard­ing its es­ti­mates about growth rates, pri­mary sur­pluses or Greece’s ca­pac­ity to pro­mote re­forms and ben­e­fit from them, com­pared to its pre­vi­ous 1.1462 anal­y­sis in Fe­bru­ary. There will there­fore be no sign of the con­ver­gence with the eu­ro­zone that La­garde re­ferred to on June 15.

De­spite the is­sue’s de­lay, the mar­kets con­tin­ued to raise the price of the ex­ist­ing Greek bonds, prob­a­bly pre­par­ing fur­ther for the up­com­ing swap of the debt ma­tur­ing in 2019 with new five-year pa­per. The pa­per is­sued in April 2019 saw its yield slide fur­ther, to 3.35 per­cent yes­ter­day, from 3.39 per­cent on Fri­day.

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