Lest we forget, considering all the trouble it caused: Greece will use the first bit of its bailout, received on Tuesday, to pay back its €8.5bn bond maturing on 19 May.
As Reuters reports, the May maturity was a most ill-starred bond:
It was Greece’s presumed inability to pay this debt, which matures on Wednesday, that prompted the EU and IMF to intervene with a 110-billion euro emergency aid package. The IMF has already lent Greece 5.5 billion euros.
“The 14.5 billion will be transferred to Greece today. We expect the transaction to take place by noon,” a bank official close to the deal told Reuters.
So it’s worth noting the May bond’s passing.
First, and not least, because Greece is now over the hump of its debt refinancing needs for 2010, having also squeezed through large maturities in April. Space for the Greek government to focus on fiscal adjustment, then.
And this is an apposite point to reflect on the state of sovereign refinancing overall, after Greece’s troubles.
As the FT notes of a Fitch bond investor survey, confidence is a bit, er, lacking:
Seventy per cent of European investors surveyed by credit rating agency Fitch said sovereign nations faced the biggest challenge refinancing their debts. Only 11 per cent thought securitisations faced the greatest challenge, while 8 per cent chose investment grade financial companies and 6 per cent plumped for speculative grade or so-called junk-rated borrowers.
There were one or two tests of this on Tuesday — yields doubled on Spain’s May auction of 18-month T-bills, compared to April’s issue, although an auction of Irish bonds met robust demand.
Of course, this all comes against the backdrop of ECB government bond-buying, plus further details on the eurozone bailout’s €440bn SPV.
And to think it was all sparked because of trouble over that €8.5bn.
Related link:
The sad end of Greece’s better tomorrow – FT