April 7, 2014 / 10:31 AM / 4 years ago

UPDATE 1-Greece in no rush to tap bond markets, finmin says

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ATHENS, April 7 (Reuters) - Greece does not need to return to debt markets imminently, its finance minister said on Monday, reiterating that Athens’ first bond sale in four years will take place at some point in the first half of 2014.

“There is absolutely no rush, nor is it a precondition, to do this before Easter (April 20)”, Finance Minister Yannis Stournaras said in an interview on Greek radio station Vima FM.

Stournaras’s comments follow media speculation that a sale could take place as soon as this week. They also come two days after the head of the euro zone’s bailout fund, Klaus Regling, warned Athens not to pay investors too high a yield, to avoid increasing its debt load.

Greece plans to sell about 2 billion euros of five-year bonds later this month, according to government and banking sources - its first foray into bond markets since the first of its two international bailouts four years ago.

A sale would mark one of the swiftest comebacks by a country from default, just two years after Greece imposed losses on private bondholders in a 130 billion euro debt restructuring.

Greece initially planned to return to bond markets with a small test issue in the second half of the year, by which time it hopes a six-year-long recession will be over.

But rapidly falling bond yields and pressure to produce an economic success before a key European election in May have persuaded Prime Minister Antonis Samaras and his fragile coalition government to bring the sale forward.

Greece was shut out of bond markets in 2010, when it was first bailed out by the EU and IMF to avoid bankruptcy, although it has continued to sell three- and six-month treasury bills.

Private investors also hold about 30 billion euros of government bonds with a maturity of between 10 and 30 years, leaving a gap in the medium-term.

“We don’t need the money to cover any financing gap, we’re doing a test to smoothen our yield curve,” Stournaras said in the interview.

Greek 10-year bond yields have fallen rapidly since briefly touching 41 percent two years ago, but are still expensive at their current level of about 6 percent, Klaus Regling, head of the European Stability Mechanism (ESM), said on Saturday.

“Every bond with such a high yield adds to the debt load,” told weekly newspaper To Vima. (Reporting by Harry Papachristou; Editing by Catherine Evans)

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