Brussels, 13/04/2010 (Agence Europe) - Greece has passed the first conclusive test now that the arrangements for the mixed eurozone/IMF mechanism have been unveiled. On Tuesday 13 April, the authorities proceeded to issue 6 to 12 month Greek bonds for the sum of €1.56 billion (i.e. more than the €1.2 billion initially foreseen). This offer has not posed any particular problems, illustrating a positive response by the markets after the clarifications given last weekend.
Although rates were generally less than 6% or 7% last week, they are still too costly for a sovereign eurozone issuer. Compulsory longer term rates also remain high. The gap between the rate of interest requested for Greek and German securities over 10 years (“spreads”) remained practically unchanged at a little more than 350 basis points. At this stage, however, it is out of the question for Athens to request activation of the bilateral loan package from its eurozone partners.
Greek Finance Minister George Papaconstantinou pointed to this on Tuesday when addressing the national parliament. He repeated that his country “has not asked for the aid mechanism to be activated”, adding: “Our objective is still problem-free borrowing on the markets, as we have done today with the Treasury bonds”.
According to the agreement sealed on Sunday 4 April, loans from member states in the eurozone could amount to up to €30 billion for the first year (with an interest rate of about 5% for fixed rate loans over three years). Broken down according to their share of the ECB capital, contributions could be: €8.4 billion for Germany (27.9%), €6.3 billion for France (21%), €5.5 billion for Italy (18.4%), €3.7 billion for Spain (12.2%), €1.8 billion for the Netherlands (5.9%), €1.1 billion for Belgium (3.6%), €859 million for Austria (2.9%), €774 million for Portugal (2.6%), €555 million for Finland (1.8%), €491 million for Ireland (1.6%), €307 million for Slovakia (1%), €145 million for Slovenia (0.5%), €77 million for Luxembourg (0.3%), €61 million for Cyprus (0.2%), and €28 million for Malta (0.1%). (A.B./transl.jl)