Austria Debt Agency Has No Details Yet On Greece Contribution

LONDON (MNI) – Austria’s debt agency has not yet received any
details on how the country’s contribution to a Greek backstop loan would
be drawn by Athens, Martha Oberndorfer, managing director of the agency
(AFFA), told Market News International Tuesday afternoon.

Oberndorfer confirmed that Austria’s maximum contribution is E858
million and “how we fund it, will depend on the tenor.”

Her comments came after EMU finance ministers agreed Sunday to a
contingency 3-year plan for Greece that would provide loans — if
requested by the Greek government — of up to E30 billion in the first
year of the program, with more funding available in subsequent years.
The International Monetary Fund would kick in an additional E10 billion
to E15 billion in the first year.

The financing costs on these loans to Greece would vary depending
on maturity and whether they were variable or fixed. A 3-year fixed
loan, for example, would carry an interest rate of around 5% under
current market conditions. That compares with about 6.5% that Greece
would have to pay if it sought financing today in the financial markets.

After a sharp positive reaction by financial markets to Sunday’s
Eurozone announcement, yields on Greek securities have once again risen.
The yield on Greek 2-year paper fell immediately following the
announcement from 6.9% on Friday to 5.4%. At the end of the day Tuesday,
however, it was back up to 6.16%, indicating lingering market concerns
about the situation in Greece.

On the home front, Oberndorfer said there are “no details to be
disclosed so far” about Austria’s second syndicated RAGB bond issue this
year. “We will have a clearer picture in the second half of May,” she
said.

The debt chief also confirmed that Austria has so far raised E10.6
billion in 2010, which includes a new 7-year benchmark issue for E4
billion sold in January.

Austria, which borrows under the name of Republic of Austria and is
rated Aaa/AAA/AAA by Moody’s, Standard & Poor’s and Fitch Ratings
Agency, is planning to sell between E21.0 and E25.0 billion worth of
bonds in 2010, which is lower than the E33.0 billion issued last year,
due to lower redemptions.

–London newsroom: 00 44 20 7862 7494; e-mail: nshamim@marketnews.com

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