A government official in Athens has said that Greece now hopes to just raise one to four billion dollars from a dollar-denominated bond it plans to sell around the world. This is down substantially from the previous five to 10 billion dollar target for the sale.
Why? American investors don’t seem all that interested and without major American institutional investors there will be far less demand.
Note this dollar-bond issue is key to helping Greece meet the needs of an upcoming 8.5 billion euro bond payment approaching on May 19th.
“Fact is there is no strong interest in the U.S. for Greek debt,” a second official said, adding Athens could cancel the issuance if “the minimum necessary amount can’t be collected.” He didn’t elaborate.
It’s all PIMCO’s fault?
“It was a bold announcement and there was greater specificity” compared with past promises of help, said Mohamed El-Erian, co-chief executive of Pimco said this week, referring to the amount of the bailout package announced last weekend. “But if all that we know is what we know today, Pimco would be on the sidelines.”
That thumbs down from Pimco, the world’s largest fixed income manager, has weighed on Greek government thinking.
“If Pimco is out then, there is little hope to raise the originally planned amount,” the second person said. [a Greek government official] “Many other big investors will follow their lead and stay out.”
He said a final decision on whether the dollar bond will be issued will be taken after the “non-deal roadshow” that will begin next week and include New York, Boston and California.
Thus it seems PIMCO could feasibly kill the bond issue, which could cause substantial liquidity challenges for Greece next month.
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