Any Takers in Greece?

I am rushing this week so I won’t have time for long and analytical pieces (no doubt to the joy of many :) ), but I would be remiss if I did not point out this one for my readers which highlights the predicament Greece currently finds itself in even if a private bid is not significant in itself.

(quote Bloomberg)

Greece may borrow privately through banks by the end of January, the second such transaction in as many months, following cuts to the government’s credit ratings, according to the country’s debt manager. The decision on whether to use a private placement will depend on reaction to the country’s stability and growth program, Spyros Papanicolaou, the managing director of Greece’s Public Debt Management Agency, said today. The country had earlier considered offering bonds through a syndicate of banks.

“We are yet to decide whether to go ahead with a syndication,” Papanicolaou said today in a telephone interview from Athens. “We might do a private placement instead. It will depend on how the stability and growth program is received by the European Commission and the markets.”

Greece, whose credit grade was lowered by Standard & Poor’s, Fitch Ratings and Moody’s Investors Service last year, sold 2 billion euros ($2.9 billion) of floating-rate notes through a private placement in December. The government hired National Bank of Greece SA, Alpha Bank AE, EFG Eurobank Ergasias SA, Piraeus Bank SA and Banca IMI SpA for the transaction, which Finance Minister George Papaconstantinou said was part of the country’s financing program for this year. In private placements, issuers offer securities directly to chosen investors rather than sell them through an auction or via a group of banks in a syndicate.

The main question is of course. Who holds the bid in these private auction and will they remain bidders as we move forward?

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