<LI class="dateStamp first">
FEBRUARY 23, 2010, 11:59 A.M. ETGreece to Issue New Bond
By COSTAS PARIS
ATHENS—Greece is aiming to issue a 10-year bond, possibly within the next few days, amid signs that conditions in the Greek government debt market are improving, a person familiar with the situation said Tuesday.
The issue, which will be the second for Greece this year—and the first since European Union leaders declared their political support for Greece's borrowing program—is widely seen as a test of credibility for the country with international investors.
The person said the issue will come "quite soon, as conditions in the Greek bond market are improving substantially."
However, amid general unhappiness by unions over recent government austerity measures, the person said the issue wouldn't come before a 24-hour general strike on Wednesday, called by Greece's two major unions, GSEE and ADEDY.
Fearing that violence could potentially erupt during the course of Wednesday's protests, the person said the government prefers to wait until the strike is over. "There will not be a bond issued on a day where there could be clashes," the person said.
The Greek government has already been in talks with foreign banks about the timing and pricing of an upcoming 10-year bond issue, a second source familiar with the government's thinking said Tuesday.
"There is still no decision on the exact day the bond will be priced. But there was contact yesterday with a couple of banks abroad to check on market conditions," the second person said.
The plans to go ahead with the bond issue comes even as a visiting delegation of EU, European Central Bank and International Monetary Fund officials visit Athens this week to discuss further measures to cut Greece's deficit.
Greece is under intense pressure by the EU and financial markets to bring down its budget gap, which hit an estimated 12.7% of gross domestic product last year, four times above EU limits. The Socialist government has pledged to cut that deficit to 8.7% of GDP this year, and below the EU's 3% cap by 2012. In order to meet those goals, the government has announced a series of spending cuts and tax hikes that it says will produce some €8 billion to €10 billion ($10.88 billion to $13.6 billion) in savings and additional revenues.
But Greece's European partners remain unconvinced. Since the EU issued its rhetorical support for Greece Feb. 12, EU members such as Germany and France, as well as others, have demanded that Greece take further steps to close its budget gap before they would commit to any specific financial support for the country.
So far, Greece says it doesn't need financial support from its EU partners, with government officials saying they are optimistic that the upcoming issue will meet with a strong investor response.
"There is a good feeling that the issue will be covered, so I expect it sooner rather than later," said the second person.
Write to Costas Paris at
[email protected]