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Breaking Views: Greece Unbound

Author: Hugo Dixon
April 11, 2014

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"The reopening of the markets to Greece also means it probably no longer faces a funding gap, which the last official projections by its creditors put at 15 billion euros over the next two years."

Greece in undergoing an astonishing financial rebound. Two years ago, the country looked like it was set for a messy default and exit from the euro. Now it is on the verge of returning to the bond market with the issue of 2 billion euros of five-year paper.

there are still political risks, and the real economy is only now starting to turn. But the financial recovery is impressive. The 10-year bond yield, which hit 30 percent after the debt restructuring of two years ago, is not 6.2 percent.

Two of the country's big four banks - Piraeus and Alpha - have raised 3 billion euros of equity between them in recent weeks to reinforce their balance sheets after a stress test orchestrated by the central bank. Eurobank, another big lender, is planning to follow suit with a 3 billion euro issue later this month.

The changed mood in the markets is mainly down to external factors: the European Central Bank's promise to "do whatever it takes" to save the euro two years ago; and the more recent end of investors' love affair with emerging markets, meaning the liquidity sloshing around the global economy has been hunting for bargains in other places such as Greece.

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