Greece Politics


Greece: Greece returns to bond market, Troika to begin talks on debt relief

April 23, 2014

On 10 April, the Greek government returned to the international capital markets for the first time in four years with the issue of EUR 3.3 billion worth of five-year government bonds. The offer was met with demand running at around EUR 20 billion, which resulted in a 4.95% yield for the newly-issued Greek securities-this was below the 5.00%-5.25% yield the government had initially expected. Greece's return to the financial markets represents a milestone for the country's economy, as it signals that the country is now able to sustain itself financially and can thus avoid a third bailout from international lenders.

Along with the government, Greece's biggest banks-Eurobank, Piraeus Bank and National Bank of Greece (NBG)-are also planning to return to international capital markets following the move of Alpha Bank, which rose EUR 1.2 billion of extra capital in March. Access to private markets will help the four major Greek financial institutions to meet the EUR 6.4 billion fresh capital requirement identified in the stress test the Bank of Greece (BoG) conducted in March.

More recently, Eurostat announced on 24 April that Greece recorded a primary surplus of EUR 1.5 billion in 2013. Eurostat's figure confirms the government's estimates and paves the way to discuss further debt relief from international lenders as early as the next meeting of EU finance ministers, which will take place in May. The recent positive developments in the Greek economy will likely result in a strong showing for the governing New Democracy party (ND) in the next local elections, which will be held on 18 and 24 May, as well as in the European Parliament elections scheduled for 25 May.

According to Nicholas Magginas, Senior Economist at NBG:

The over-performance in budget implementation on the expenditure side, in conjunction with the access to the markets - for the first time in 4 years - following the issuance of a 5y government bond as well as the remaining funding from the economic support program provide sufficient liquidity for Greece's financing needs until Q1 or Q2:2015. Assuming that improving market conditions will contribute to a successful implementation of the privatization programme, there is much less likelihood that Greece will need a supplementary conventional financing program.

The government expects the economy to grow 0.6% in 2014. FocusEconomics Consensus Forecast panelists expect GDP to grow at 0.1% in 2014, which is unchanged from last month's estimate. In 2015, the panel expects the economy to grow at 1.6%.

Author:, Senior Economist

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