Greek
government bond yields shot up on Tuesday, amid growing concerns about Athens'
plans to leave its bailout program ahead of schedule.
It comes after Prime Minister Antonis
Samaras won a confidence vote in parliament early Saturday, with the backing of
all 155 conservative and Socialist lawmakers in his coalition. He called the
poll to force lawmakers to back his plans to exit its international bailout
program ahead of schedule.
Greece is hoping to leave its bailout
program early and meet its funding needs through the debt markets, rather than
call on the "Troika" organizations running Greece's bailout program -
the European Commission, European Central Bank (ECB) and International Monetary
Fund (IMF) -for more assistance.
The country was one of the first in Europe
to be hit by the global financial crisis of 2008 and the full scope of its
problems helped spark the euro zone sovereign debt crisis. Greece needed to be
bailed out by the IMF and EU to the tune of 240 billion euro ($304 billion) and
was required to impose a tough - and hugely unpopular - austerity program. It
now hopes to leave the program before its scheduled end in 2016 without further
assistance, after years of crippling recession.
The latest developments out of Greece have
rattled investor confidence and hit ASE, Athens' benchmark index, hard. It was
trading around 4.5 percent lower on Thursday morning. Although very few
investors are buying long-dated Greek sovereign debt at the moment, the yield
on the 10-year bond is still seen as an indicator of investor sentiment in the
country.
Sarah Pemberton, European economist at
Capital Economics, said Greece's government was under pressure to exit its
bailout early given the growing popularity of Syriza, the leftwing anti-bailout
political party.
"But the economic case is very
unconvincing that Greece is able to support itself," she told CNBC,
highlighting concerns that it would not be able to return to market without
increasing its debt financing costs.
"Economic indicators show that the
third quarter might be Greece's first quarter of positive growth, but it's in a
very vulnerable positon and any negative market reaction could prolong its time
in recession," Pemberton added.
Samaras'
government has also been plagued by the prospect of snap elections early next
year if the prime minister fails to gain the support of opposition lawmakers
for his candidate for president. A promise to exit the painful program early
was key in securing that backing.
"We don't have buyers in the Greek bond
market because of the political risk, the possibility of snap elections in
early 2015," a bond trader at a major Greek bank told Reuters.
(Πηγή: CNBC.com)
