Greek 10-year yields are at the lowest level in more than 13 years — back to where they were long before the GFC, let alone the euro zone debt crisis — and they likely have further to fall.
This reflects the extraordinary rally in global bonds, in a world awash with cash and yet lacking sustained inflation pressures. But it’s also a testament to the resilience of the euro project. Not only has Greece stayed within the bloc, but there are signs its economy is slowly normalizing/adjusting. The process has been incredibly painful, remains ongoing and is not guaranteed to succeed long term, but it suggests that structural reforms can potentially be implemented over time.
The latest leg of the bond rally has been fueled by EU finance ministers agreeing to disburse 1b EUR in funds to Greece, saying the country has fulfilled the reform conditions set out in its first post-bailout review. That may enable the country to refinance at lower cost, further improving its debt profile.
It’s not just Greek bonds that are in favor — the country’s equities will continue to outperform as the economy recovers and benefits from debt relief.
The Athens Stock Exchange has soared about 23% this year, outperforming the Stoxx 600 and even surpassing peripheral peer Italy. Part of the gains are due to the global risk rally as well as Greece’s economic recovery, with GDP forecast to grow 1.9% this year, versus 0.1% for Italy and 1.2% for the euro zone.
Financials make up almost one-quarter of the ASE and comprise some of the best year-to-date performers. The FTSE/Athex Banks index has soared over 40% ytd. The euro-area’s agreement to disburse around EU1 billion to Greece can support both the bond market and the country’s banks. Greece may also repay part of its IMF loans early.
Greek enterprises reported higher sales and a significant increase in profitability in 2017, while positive signs are also evident in 2018, ICAP said in a survey based on a sample of 13,154 enterprises.
The survey said that accumulated turnover grew around 10 pct in 2017, while operating earnings rose around 17 pct compared with the previous year. Net pre-tax earnings totaled 4.67 billion euros in 2017, up 14 pct from 2016. ICAP said that 153 Greek-listed enterprises -excluding banks – recorded a 9.0 pct increase in turnover and a 25 pct rise in profits in the first half of 2018.
Nikitas Konstantellos, chairman and CEO of ICAP Group, commenting on the survey said that “after a long-term recession period, the Greek economy recorded a slight recovery in 2017, with the country’s GDP growing by 1.5 pct compared with the previous year. It is encouraging the fact that this trend continued in 2018 at a slightly increased rate. This development will have a positive effect on Greek business activity”.
(Bloomberg) —Greece’s plans to repay part of its loans from the International Monetary Fund ahead of schedule may soon come to fruition, paving the way for the debt-stricken nation to claim it has taken another step toward economic normalcy.
Early repayment of expensive IMF loans has been a longstanding ambition of the Greek government, as it seeks to bring down its debt refinancing costs. Talk of the plan comes as the country moved closer to fulfilling a first set of post-bailout commitments, which will likely allow for the disbursement of some 1 billion euros ($1.12 billion) in aid at a meeting of euro-area finance ministers on Friday.
Prime Minister Alexis Tsipras’s government hasn’t so far submitted any formal request to the IMF to make an early repayment, but the government is exploring such a step, according to two Greek officials, who spoke on condition of anonymity as the plans are not yet final.
Greece and its creditors struck a landmark deal last summer to ease the repayment terms for part of the nation’s mountain of debt, which nonetheless still stands at around 180 percent of its gross domestic product. Repaying the IMF early would reduce Greece’s debt obligations for the coming years since part of these loans are more expensive than both the bailout funds it has received from the euro zone and even the country’s cost of new borrowing from the markets.
The move could also help boost Tsipras’ political capital ahead of a general election this year, as it will add to signs that the economy is stronger and that the country can start weaning itself off its creditors. This will also allow the premier to claim he has reduced the IMF’s exposure to Greece and thus reduced the need for its oversight.
Waiver Needed
The repayment will first require a green light from the euro area. That’s because, as creditors to Greece, other euro-area countries must waive their right to be paid back early by a proportional amount. This waiver has been granted in the past to former bailout countries such as Ireland and Portugal.
EU officials say Greece hasn’t so far made any official request to repay the IMF early. But even if it does, it is not a given that the euro zone will be on board.
That’s because some countries could be skeptical about whether the early repayment would be financially beneficial for Greece rather than just replacing official debt with still-pricey borrowing from the markets. As well as needing to show that the savings in debt servicing costs from this swap would be significant, Athens may also need to prove to its creditors that its plans for economic overhauls remain ambitious.
Countries such as Germany, which insisted on the IMF’s participation in the Greek rescue program, may hesitate to approve a step that will minimize the fund’s involvement, officials say. Such nations have in the past sought the IMF’s participation as a seal of credibility for the Greek bailout.
What’s more, the government’s latest delays in fulfilling the conditions attached to its post-bailout review, including a prolonged spat over a household insolvency framework may spook creditors, who worry about its impact on the Greece’s troubled banks and fear it may be a harbinger of profligate behavior ahead of this year’s national elections.
27 Μάρτιου (ΑΠΕ-ΜΠΕ) — Μηδενίστηκε η εξάρτηση του ελληνικού τραπεζικού συστήματος από τον ELA – του μηχανισμού παροχής έκτακτης ενίσχυσης των τραπεζών σε ρευστότητα.
Η Attica Bank ήταν η τελευταία που είχε την ανάγκη κεφαλαίων από τον ELA και πλέον έχει απεξαρτηθεί και αυτή. Αξίζει να σημειωθεί, σύμφωνα με τραπεζικές πηγές, πως την 1η Ιανουαρίου 2012 η ανάγκη του συνόλου των ελληνικών τραπεζών από τα κεφάλαια του ELA ήταν ύψους 17,43 δισ. ευρώ, ενώ τον Αύγουστο του 2018, όταν η Ελλάδα εξήλθε του προγράμματος των δανειστών, ο ELA ήταν ύψους 4,49 δισ. ευρώ. Τραπεζικές πηγές μιλώντας στο ΑΠΕ – ΜΠΕ τόνιζαν πως ο μηδενισμός του ELA δείχνει ότι το ελληνικό τραπεζικό σύστημα επανέρχεται στην κανονικότητα τους.
Bloomberg: Η θριαμβευτική επιστροφή της Ελλάδας στην πρωτογενή αγορά ομολόγων της Ευρώπης με την έκδοση του δεκαετούς ομολόγου, μόλις λίγες εβδομάδες μετά την έκδοση του πενταετούς ομολόγου, θέτει ορόσημο στην ανάκαμψη της χώρας από την οικονομική κρίση.
Η έκδοσή του ελληνικού δεκαετούς ομολόγου, προσέλκυσε το μεγαλύτερο βιβλίο εντολών της εβδομάδας τόσο από πλευράς όγκου όσο και από πλευράς υπερκάλυψης, επιτρέποντας στον ΟΔΔΗΧ να κόψει 22,5 μονάδες βάσης από την αρχική τιμή.
Δείτε τους παρακάτω πίνακες από τα διαθέσιμα εβδομαδιαία δεδομένα στατιστικά των βιβλίων:
(Bloomberg) —Greece’s triumphant return to Europe’s publicly syndicated primary bond market with a 10Y deal, just weeks after it sold a long 5Y tranche, sets a milestone in its recovery from the financial crisis.
The deal attracted the week’s largest orderbook by both volume and subscription level, allowing the sovereign to cut 22.5bps from the initial price talk
See tables below for available weekly bookstats data
(Bloomberg) —Greece on Tuesday plans to mark a milestone in its recovery from a bruising financial crisis when it sells 10-year debt for the first time in nine years.
The country plans to open the books on a syndicated offering of at least 2 billion euros ($2.3 billion) of bonds after announcing Monday it hired banks for the sale, according to a person familiar with the matter, who asked not to be named because the details aren’t final yet.
Prime Minister Alexis Tsipras, facing a general election this year that polls show he’s set to lose, has pointed to bond sales as proof the country has turned a corner after its economy shrank by a quarter during the crisis.
After ending its bailout program last summer, Greece tapped the market for 2.5 billion euros of five-year bonds in January. The success of that sale, the country’s first in almost a year, paved the way for the 10-year issue.
Following the Tuesday sale, Greece will be almost two-thirds of the way to meeting its 2019 goal of raising as much as 7 billion euros this year.
Greek stocks and bonds have rallied this year, with the Athens Stock Exchange up more than 15 percent and the yield on benchmark 10-year government bonds down below 3.7 percent. The yield peaked at about 37 percent at the height of the debt crisis in 2012, just before Greece defaulted on its debt to private-sector creditors.
The country last sold 10-year bonds in March 2010, with a 6.25 percent coupon, as the country was in the eye of a storm after a new government revealed that its predecessor had hidden the true size of its budget deficit.
While it issued similar maturity debt in 2017, that was part of an exchange for bonds that were part of its debt restructuring.
Greece’s travails opened a new chapter in the global financial crisis, and two months later it entered the first of three bailouts from the euro area and International Monetary Fund.
For other euro-area countries like Ireland and Portugal that followed Greece in having to take bailouts, issuing 10-year debt was seen as a key staging post in the journey to regaining economic sovereignty.
Moody’s Investors Service on Friday raisedGreece’s sovereign credit rating two steps to B1 from B3. Although that’s still four levels below investment grade, it gave a fresh boost to the government’s bond-selling plan following European Commission criticism that the government was dragging its feet on key economic reforms.
(Bloomberg) —Greece’s sovereign credit rating was raised two levels by Moody’s Investors Service, helping the government’s plan to sell new debt as soon as this month.
The country’s long-term foreign currencydebt was upgraded to B1 with a stable outlook from B3, Moody’s said in a statement on Friday. The new ranking remains four levels below investment grade.
“The ongoing reform effort is slowly starting to bear fruit in the economy,” Moody’s said. “While progress has been halting at times, with targets delayed or missed, the reform momentum appears to be increasingly entrenched, with good prospects for further progress and low risk of reversal.”
Greece exited its international bailout last summer, though foot-dragging on some key economic reforms is raising creditor concern and putting at risk a planned debt relief measure this month. The government is planning to tap the markets once again, after a successful sale of five-year bonds in January, most probably with a new 10-year bond this month, given that appetite for Greek risk among investors remains strong.
The country’s stocks and bonds have risen this year, with the Athens Stock Exchange index up about 16 percent since the start of 2019. The yield on benchmark 10-year bonds is now below 3.7 percent, compared with a peak of about 37 percent at the height of the debt crisis in 2012, when Greece defaulted on its debt to private-sector creditors.
“The most politically painful measures have already been enacted, with the economy finally showing signs of recovery, reducing the incentives for any future government to jeopardize the hard-won gains,” the rating company said. “The stable outlook balances the relatively low risk of policy or fiscal reversal against the limited upside to Greece’s credit profile.”
The upgrade is the first time in more than a year that Moody’s has changed Greece’s rating. Fitch Ratings upgraded the country to BB- in August, while S&P Global Ratings rates the country B+. Each is below the junk threshold.
(Bloomberg) —Greek banks benchmark index hits fresh day highs as the government is said to have sent a plan for helping the country’s banks reduce their high stock of non-performing exposure to the European Commission for approval.
The gauge advances by 6.2%, heads for its best daily performance in more than two months; the plan, in which debt is unloaded into a special purpose vehicle which sells bonds to investors, is modeled on a similar one used in Italy
National Bank of Greece leads gains among four systemic banks, up by as much as 10.6%; it slightly pares gains to trade 10.3% higher at EU1.234, a level unseen since Jan. 10
Alpha Bank +5.8%, Eurobank +3.7%, Piraeus Bank +8.8%
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