Greece just released the details of its new Diaspora bond, aimed at boosting state coffers through sales to Greeks living abroad (via FTAlpha).
You can read the full document at the SEC, but here’s a quick breakdown:
- You can buy the bonds if you are of Greek descent in the U.S., or a Greek national living outside the country, according to WSJ.com.
- The offering may be as large as $3 billion, and sales will occur every 6 months
- The document points out that, since 1946, Greece has never defaulted on its debt
And, if you aren’t aware of the risks facing your home country, here are the details (emphasis ours):
The short-term real growth outlook of the Hellenic Republic is unfavorable and a rebound depends upon the return of market and private sector confidence as well as the successful implementation of structural reforms under the Economic Adjustment Program.
Real GDP growth in Greece is estimated to have contracted significantly in 2010 (-4.2%), and is also expected to contract in 2011 (-3.0%), with recovery expected to gradually set in 2012. High uncertainties, expensive external financing, tight credit conditions, and the magnitude of fiscal adjustment agreed under Economic Adjustment Program are weighing on the private sector. A rebound of economic growth will only be possible when market and private sector confidence returns and the effects of structural reforms start to materialise. The goals set for structural reforms under the Economic Adjustment Program are ambitious and although significant progress has already been made, most notably in the areas of pension, labour market and “closed professions” reform, keeping up the momentum and swiftly implementing the complex structural changes required remains a challenge. If delays in the implementation of the planned structural reforms were to occur, this could delay economic recovery, which in turn would jeopardize fiscal consolidation and the stabilisation of the Greek financial sector, and ultimately could call into question Greece’s ability to service its debt.
For a more visual reminder of the current debt problem in Greece, take a look at the country’s debt maturity profile. Things are looking particularly awful between now and 2014.
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