For over eight years, Greece managed to stay on the surface due to capital injections from its euro partners and the IMF. The bailout programmes end in five weeks. After that, the country must refinance through the capital markets.
Of course, Athens is not in need of immediate funding, thanks to a liquidity buffer of 24bn euros, and the country will be fully financed until the middle of 2022. All experts agree, however, that Athens should not wait that long. The country should build trust in the market with trial bond issues.
The Public Debt Management Agency wants to soon test the intentions of investors. There is talk of issuing a ten-year bond. All the other four euro problem countries had also issued ten-year bonds at the end of their programme, and some of them months before their bailout exit.
If Greece manages to issue, before the end of the programme on 20 August, a state bond with reasonable terms, that would be a great success. Prime Minister Alexis Tsipras could use that to argue that there is a clean exit from the bailout programme.
The fact that investors thirst for Greek state bonds proves the example of the OTE telephone company. The group, in which Deutsche Telekom has a 45 percent stake, last week drew from international markets 400mn euros, from a four-year bond. The coupon was 2.375 percent and was covered five times over, which would instill envy in the Public Debt Management Agency.