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Greece plans return to markets as end of second bailout looms

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Light at the end of the tunnel: workers inspect a major highway project in Platamonas, Greece. KONSTANTINOS TSAKALIDIS

Light at the end of the tunnel: workers inspect a major highway project in Platamonas, Greece. KONSTANTINOS TSAKALIDIS

Bloomberg

Light at the end of the tunnel: workers inspect a major highway project in Platamonas, Greece. KONSTANTINOS TSAKALIDIS

The Greek government, approaching the end of a second international bailout that has kept it afloat since 2010, plans a return to markets by selling €2bn of bonds, three officials said.

Only the exact timing remains to be resolved, one Greek official said yesterday.

The 'Wall Street Journal' reported on Monday that Greece hopes to raise some €5bn on financial markets this year.

Greek finance minister Yannis Stournaras (right) said that market financing would complement Greece's other efforts to line up a year of funding, a condition of unlocking money from the International Monetary Fund.

Greece "fully satisfies" the 12-month funding condition, he said.

"A small issuance of bonds, three or five-year bonds in the first semester of 2014, will also contribute to the financing needs of Greece," Mr Stournaras told reporters in Athens after a meeting of European Union finance ministers.

The timing of the bond offering will depend on market conditions and will definitely come after the government has met all the conditions for the release of €6.3bn of bailout aid, which EU finance ministers endorsed yesterday.

Greece is also in line for an additional two payments of €1bn each in subsequent months.

"With Greece still having an extremely high debt ratio and high outright yields, it's easy to be sceptical," said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London.

"However, the 10-year yield is below the psychologically significant 7pc hurdle. We would be cautiously optimistic that Greece will issue bonds in the first half."

The yield on Greek 10-year bonds dropped to 6.4pc yesterday, the lowest since May 2010 and down from as much as 44pc in 2012.

Greek securities returned 23pc in the first quarter – the best performance among the 14 euro-area sovereign debt markets tracked by Bloomberg World Bond Indexes.

Greek debt has rallied with securities from Europe's most indebted nations, as investors return to markets they shunned during the region's debt crisis.

The average yield to maturity on bonds from Greece, Portugal, Ireland, Italy and Spain dropped to a euro-era low of 2.35pc on March 27, according to Bank of America-Merrill Lynch Indexes.

George Linatsas, managing director of Axia Ventures' Athens branch, said the Greek government would return to the bond market in 30 to 40 days.

As Greece seeks to emerge from a six-year recession, politicians in the Mediterranean nation have struggled to meet rescue requirements and keep the government afloat.

The Greek parliament this week approved wide-ranging legislation on measures from extending the shelf-life of milk, to allowing pharmacists to open shops inside supermarkets. (© Bloomberg)

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