Greek bonds and stocks did not gain after the latest bailout program review and uncertainty prevails over the second review scheduled for September, Bloomberg says.
According to the report, investors stay away from Greek state bonds and stocks, thereby making borrowing from the international markets impossible any time soon.
According to Bloomberg’s World Bond Indexes in the past three months, Greek government bonds showed the worst returns of all European state bonds.
“The Athens Stock Exchange trails only Nigeria and Venezuela in the worst-performing primary equity indices tracked by Bloomberg in the period,” the report says.
Greece is excluded from the European Central Bank‘s quantitative easing program. For the next 10 years Greece can borrow at approximately 8.2 percent, whereas Portugal can borrow at 3 percent and Cyprus at less than half Greece’s rate.
According to the report, the Greek government is likely to prolong negotiations for the second review and move very slowly in implementing the economic reforms required. It is also noted that Greece has yet to receive a part of the bailout tranche disbursed in June, since it has implemented only two of the 15 reforms required.
“Uncertainty about the government’s ability to deliver on its commitments for structural reforms, and persistently high borrowing costs for the sovereign and Greek companies weigh on an economy already asphyxiated by the harshest austerity program in history,” the report continues.
High yields make Greece’s target of tapping bond markets next year impossible and put Greek bonds in the same league “with African commodity exporters and their sovereigns.”