Bloomberg: Europeans do not want Greece to return to the markets

Troika appears negative for Greece to return to the markets this year, Bloomberg argues, since this could allow the Greek government to ease its reforms.
 
The European Commission, the ECB and the IMF fear that the Greek government will repeat the mistakes of the past if it manages to escape from the measures of the bailout program, a Greek and an EU official admitted to the agency.
 
"Troika realizes now that when Greece had a deficit of 10% and had all the bargaining power, it gave excessive weight to austerity, rather than reforms. Greece’s return to the markets would mean that some of the tougher reforms will never be implemented," Royal Bank of Scotland analyst Michael Michaelides says.
 
Bloomberg notes that the performance of the Greek 10-year bond is at its levels before the crisis, reaching last week 6.65%, the lowest level in four years. At noon Monday it was around 6.81% compared to 37.1% in March 2012.
 
With these levels of yields, Berenberg Bank chief economist Holger Schmieding believes that a version of the 2-year or 5-year Greek bonds will not be met with a particular problem and can be issued at an acceptable cost for Greece, if there were no developments to affect the unity of the coalition government.
 

This is why the pressure that troika may bring upon Samaras is decreasing, as Bloomberg notes. Especially as the country displays a primary surplus now, and therefore it can pay salaries and pensions, but is forced to borrow just to pay off the public debt of 321 billion euros.
 
Given that most of this debt is towards the troika, if Greece’s creditors decided to freeze the overdue tranche of bailout loans, both the markets and 11 million Greeks would not be protected from a possible default.
 
Europeans believe that the only way to ensure that Greece will proceed with the necessary reforms is a new bailout package with strict conditions, which Stournaras prefers to avoid, as he stated yesterday.