Barvetii First Bond Sale For Greece.

Barvetii: Greece has successfully sold government bonds in its first attempt since the huge EU-IMF loan bail-out was launched in early May.

Analysts at Barvetii the international wealth consultants believe this first bond sale will test investors appetites after a recent downgrade by the credit rating agencies, which cut the countrys rating to "junk". The benchmark Greek 10-year bond yield trades at 10%, almost twice as much as Spains, and well above the UKs 3.5%. At these levels, borrowing from capital markets is unaffordable.

Greece has a six month deadline to repay the bonds, with a return rate of 4.65%, which is lower than IMF loans. The controversial bail-out package is worth 110bn euros over three years. However, payments are on condition that Greece slashes public spending and boosts tax revenue.

Greece abandoned plans to sell 12-month bonds, which would probably have been seen as riskier.

Barvetii said that because the bonds sold had a very short maturity, the sale was not a good indication of how much faith investors had in Greeces long-term prospects.

Austerity measures already announced include raising the retirement age, cracking down on tax evasion and ending public sector bonuses.

Barvetii believes Greece does not plan to restructure its debt, as investors seem to expect. A restructuring would mean losses for investors and further undermine confidence in the country. Such a move would also be a blow to German lenders, which have 45bn worth of Greek bonds.

by: MartinWood

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