Tuesday, April 28, 2009

“It’s not because of need. It’s to be on the safe side.”

TO BE NOTED: From Bloomberg:

"Greece May Sell 8 Billion Euros of Bonds as ‘Cushion’ (Update1)

By Maria Petrakis and Andrew Davis

April 28 (Bloomberg) -- Greece, the second-most indebted European Union nation, may increase bond sales this year to protect against a possible collapse in investor demand on global capital markets.

The government might sell an extra 8 billion euros ($10.4 billion) of debt, bringing the total issued this year to 50 billion euros, Economy and Finance Minister Ioannis Papathanasiou said today in an interview in Athens.

It’s a “cushion” against any deterioration in debt markets, he said. “It’s not because of need. It’s to be on the safe side.”

Greece raised 7.5 billion euros at a sale of three-year bonds yesterday, all but completing the 43.7 billion euros of debt it planned to sell this year. Greece, Spain, Portugal and Ireland had their credit ratings cut this year as the global crisis fueled concern that Europe’s most indebted nations would have trouble borrowing as credit markets seized up.

The additional sales would be of bonds maturing in three, five and 10 years, although no decision has been made, Papathanasiou said.

Greece’s ratio of debt to gross domestic product will rise to 96.3 percent this year, according to a government forecast. That’s second only to Italy among the EU nations.

The difference in yield, or spread, between 10-year Greek notes and German bunds was 217 basis points as of 1:55 p.m. in London, down from 300 basis points on March 12. The average in the past 10 years is 55 basis points.

To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net"

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