ATHENS – Greece’s new deal with lenders is making skeptical investors take another look at whether to put their money in without getting burned.
Prime Minister and Radical Left SYRIZA leader Alexis Tsipras, completing his surrender to the creditors, agreed on more harsh austerity he once opposed and is aimed at providing banks with cheaper financing in hopes they will start lending.
But the consensus is that a case for investment in Greece remains difficult to make.
“The market does seem to be a little less concerned about Greece, at least as evidenced by the decline in risk over the last few weeks,” Melissa Brown, Senior Director of Applied Research at Axioma Inc., in New York told the business site Pensions & Investments. “This is true for … the Greek market in general.”
Despite the roller-coaster ride of the Athens Stock Exchange, previous investors getting stiffed 74 percent on their holdings of Greek bonds and constant political instability, some investors still are more eager money in Greece. The country remains more volatile than any other market tracked by Axioma, including China and Peru.
“There still needs to be a high expectation of return in order to justify the exceedingly high level of risk in the market,” Brown said.
The bailout deal means Greece won’t default on loans in July and the country is hoping to return to the markets next year if it can convince investors they won’t lose their money.
Until very recently, Greece — and its overwhelming debt load — did not look healthy. But there have been some interesting developments during the past few weeks, said
“We can see things moving in a constructive fashion in Brussels, it feels that we are seeing a conciliatory tone in Berlin, and in the IMF there is also a desire to deliver a pragmatic solution.
“All of this is looking more constructive. If Greece is the canary in the coal mine, the canary is looking as fit and well as it has done for the last couple of years,” Mark Dowding, Partner and Co-head of Investment Grade at BlueBay Asset Management LLP in London told P&I.