{"id":447,"date":"2010-06-29T06:00:00","date_gmt":"2010-06-29T10:00:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=447"},"modified":"2018-08-18T17:44:38","modified_gmt":"2018-08-18T21:44:38","slug":"unexpected-greek-foray-into-debt-markets","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/06\/29\/unexpected-greek-foray-into-debt-markets\/","title":{"rendered":"Unexpected Greek foray into debt markets"},"content":{"rendered":"

This Euro-year has all been about scrutiny of those profligate spenders, the Greeks.\u00a0 May’s big worldwide stock market declines were largely triggered by fears of a Greek budgetary collapse and the contagion it would have throughout Europe.\u00a0 Now those Greeks are back in the realm of the unexpected.<\/span><\/p>\n

Specifically, it was announced yesterday that Greece intends to tap worldwide debt markets to try and raise approximately $5 billion of sovereign debt.\u00a0 Recall that Greece’s inability to tap debt markets and roll over existing debt into new issues was a part of what caused the imbroglio in May.\u00a0 Debt investors saw a Greek economy unable to support its debt load and they shied away.\u00a0 The Europeans responded with a huge bailout package meant to calm investor fears.\u00a0 Well Greece still has access to those bailout monies.\u00a0 So why would they try and tap public markets now?<\/span><\/p>\n

Analysis:<\/strong> It’s my opinion that the Greeks are trying to demonstrate to the world that their economy is on a more solid footing.\u00a0 Austerity measures have been put in place and they have been audited independently.\u00a0 So if the Greeks can tap private investor funds by raising debt they will have demonstrated a certain amount of solidity thought impossible just two months ago.\u00a0 Additionally, the Greeks are probably trying to maintain open capital flows between itself and other nations’ investors.\u00a0 In other words, they don’t want the flows to be staved off for generations to come.<\/span><\/p>\n

However, there is a BIG risk to the Greek debt offering.\u00a0 Namely, what if investors don’t buy the Greek debt issue?\u00a0 That would probably send paroxysms of fear through global financial markets again.\u00a0 If the Greeks succeed then financial markets may finally calm down.\u00a0 Why might a prospective investor buy into Greece at this moment of greatest turmoil?<\/span><\/p>\n

For one, the Greeks do have access to the bailout monies.\u00a0 As an investor, that would have to give you greater comfort than you would have had earlier this year.\u00a0 Additionally, the Greeks have undertaken severe austerity measures and it looks as if more are to come.<\/span><\/p>\n

I cannot\u00a0guarantee you\u00a0what the response will be from global financial markets.\u00a0 However, my intuitive sense is that Greece will be able to place its $5 billion of debt.\u00a0 That issuance will be accompanied by tremendous noise in the press about the risks that will dilute the psychological boost that such an issuance is meant to provide.\u00a0 Without being too snide, if I were a European finance minister (say in Germany) I would secretly buy the snot out of this Greek debt issue.\u00a0 That would be some of the best $5 billion that could be spent.<\/span><\/p>\n

Let’s hope Greece’s mini-gamble pays off.<\/span><\/p>\n

Importance grade:<\/strong> 9; succeed big and worldwide financial markets will be giddy.\u00a0 Fail big and worldwide financial markets will be queasy.\u00a0 All eyes will be on the sales July 13th and 20th.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This Euro-year has all been about scrutiny of those profligate spenders, the Greeks.\u00a0 May’s big worldwide stock market declines were largely triggered by fears of a Greek budgetary collapse and the contagion it would have throughout Europe.\u00a0 Now those Greeks are back in the realm of the unexpected. Specifically, it was announced yesterday that Greece […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-447","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=447"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/447\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}