Greece returns to the bond market: Back on track – a successful comeback?

Marcus Pahl

Abstract


For four long years and reasons well known, Greece was absent from the international bond market. Its reputation as a debtor destroyed, the little Eurozone member country was unable to finance itself like all modern states do: by selling bonds to international investors. Greece had to live off hand-outs from foreign governments and behind the shield of the European Central Bank. In the spring of 2014, however, Greece regained access to the bond markets – surprising in itself, but particularly because investor demand soared and Greece could have placed many more bonds than it did. This article analyses the causes and dynamics of this odd Odyssey. Based on document, media, and financial data reviews and expert interviewing, it evaluates the comeback of Greece and provides a brief outlook concerning the future of the country’s strategic position on the financial market. The author concludes that while Greece staged a successful comeback which was partly symbolic and theatrical, it is not yet back on track as a normal nation with mainstream public debt financing.

Keywords: austerity, bond markets, European elections, European periphery, Eurozone crisis, fiscal policy, GIIPS, Greece, haircut, public debt, sovereign debt crisis

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Technische Hochschule Wildau [FH] - Technical University of Applied Sciences, Wildau, Germany