LONDON (MNI) – Spreads are irrelevant in the current situation
where a large body of traditional investors in Greek government bonds
have withdrawn from the market, Petros Christodoulou, head of the Greek
Public Debt Management Agency, said Thursday.
Christodoulou said that the downgrade of Greece’s sovereign ratings
by ratings agencies had led to a “loose, passive supply” of GGBs worth
between “30, 40 … up to 50bn” euro, he said.
He said that he had not been surprised by the widening in Greek
government bond spreads and said that “patience” would be required in
order to give the country’s austerity programme time to convince
international investors that the country is on the right fiscal track.
“Markets tend to dislocate, markets tend to overshoot…they can be
out of whack for a long time,” he said.
“Very few of the leveraged real money investors have been marketing
in Greece since April/May,” the PDMA head said, “mainly because most
people are waiting to see how the austerity package will pan out”.
“We have had a situation since June of an overhang of supply and an
absence of buyers,” he said.
“Spreads are irrelevant in this situation,” he added.
The short-end of the Greece market had seen steady and good
quality demand, he said.
“Slowly and steadily we will be seeing investors extending from 6
months to 12 months and out,” he said. But there would be no demand for
12 months until “spreads come in tighter”.
But he said he was confident that spreads would start to come in
and noted recent positive signals from investors.
–London newsroom: 00 44 20 7862 7494; email: nshamim@marketnews.com
[TOPICS: MNXAU$,M$X$$$,MFXBO$,MGX$$$,M$$FI$]
