Greece not planning immediate aid request
Published 16/04/2010 | 12:44
European Union finance ministers said Greece doesn’t have an immediate plan to trigger a rescue package even as the country’s bond yields rose to the highest since before the bailout plan was announced.
Greek 10-year yields increased to 7.255pc today, approaching the rate before the €45bn rescue package for the cash-strapped nation was unveiled on April 11.
Spanish Finance Minister Elena Salgado, whose government holds the rotating EU presidency, said ministers won’t decide on any further action at a two-day meeting in Madrid that began today.
“This seems a reluctant, foot-dragging exercise,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a telephone interview yesterday. “The market wants closure and it’s not getting it.”
The euro region is aiming to prevent the first default of a member nation that would risk sending shockwaves through the rest of the currency area.
Greece needs to raise €11.6bn by the end of May, and Prime Minister George Papandreou has said borrowing at current market interest rates is “unsustainable.”
“We are not expecting any decision today on Greece,” Salgado told reporters in Madrid before the meeting. EU Economic Affairs Commissioner Olli Rehn called the April 11 aid agreement for Greece a “solid decision.”
The fiscal crisis risks spreading to other nations, with Portuguese bonds today falling to the lowest in almost two months.
The yield on Portugal’s 10-year debt rose 5 basis points to 4.445pc at 11:16am Madrid time. A basis point is one hundredth of a percentage point.
Papandreou yesterday asked for a meeting with the EU, the International Monetary Fund and the European Central Bank, which agreed to back the rescue package for Greece. Talks will begin in Athens on April 19.
“It’s a matter of preparing a joint program of conditionality and financing if needed and if required,” Rehn said today in Madrid.
Greece will begin a presentation to US investors about a possible debt sale on April 20, Market News reported, citing comments by Petros Christodoulou, managing director of the Greek Public Debt Management Agency, to Japanese news service Jiji News.
At the Madrid meeting, finance ministers and central-bank heads will be discussing ways to bring down budget deficits across the region, which have surged as the worst recession in 60 years slammed revenue and prompted a raft of government stimulus spending.
ECB executive board member Juergen Stark said yesterday that the Greek meltdown may signal a new phase of the crisis, which began in August 2007 with seizures in the global credit markets and has seen borrowing rocket as governments were forced to bail out some of the world’s biggest lenders.
“I am particularly concerned about the dramatic deterioration in public finances, which will require very ambitious fiscal consolidation efforts in the years to come,” Stark said in a speech in Washington.
The premium of Greek debt over comparable German bonds has more than doubled since December 1 on concern that Greece would struggle to trim the deficit and fund its rising debt.
The prospect of a euro-area country defaulting or needing a bailout contributed to the euro declining more than 5pc this year and raised the borrowing costs for other EU nations with high deficits.