Hellenic hype

5 May 2017 By Neil Unmack Follow @unmack1

Athens has pledged to cut pensions and raise taxes, and could soon be eligible for European Central Bank bond purchases. That would push up prices just as other euro zone bonds start going the other way. Europe could drag its heels, but the likelihood of a messy default is low.

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Greece is in a mess but not at the brink

Context News

Germany and other euro zone lenders are not working on debt relief measures for Greece, the county’s finance ministry told Reuters on May 4, in response to an article published in Handelsblatt newspaper.

Handlesblatt said the European Stability Mechanism, the European Central Bank and the International Monetary Fund had prepared a document exploring debt relief measures for Greece to be discussed at the next meeting of euro zone finance ministers on May 22. Proposals include extending Greek debt and replacing IMF loans with longer, cheaper debt issued by the ESM bailout fund.

Greece’s third bailout is expected to last until mid-May 2018. Any decision on debt relief will be taken then, the finance ministry said in a statement to Reuters.

Greece’s public debt is expected to peak next year at 181 percent of GDP according to IMF forecasts. Its 10-year bonds yielded around 6 percent on May 5 at 09:00 BST.

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