PIMCO: No Market Return for Greece

An official of the world’s biggest bond fund manager PIMCO has contradicted Greek Prime Minister Antonis Samaras’ claims that a recovery will begin this year with a return to the markets despite a lingering deep recession and ongoing economic crisis.

In an interview published on Jan. 3 in Germany’s Sueddeutsche Zeitung, a spokesman for PIMCO disputed assertions by Samaras and Finance Minister Yannis Stournaras that once the last of two international bailouts of $325 billion run out that Greece can borrow again from the markets.

The country has been locked out since appealing to the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) for a rescue in 2010 that came with harsh austerity measures that have worsened a deep recession, now entering its seventh year, and creating record unemployment and deep poverty.

Greece is still also locked in stalled negotiations with the Troika over unresolved reforms and a hole in the 2014 budget and with revenues off expectations – despite what looks like a coming primary surplus – the bond managers aren’t convinced Greece is on the road back just yet.

PIMCO’s money manager Myles Bradshaw told the German newspaper that the investment firm did not believe Greece would be in a position this year to raise money on the international markets. A previous PASOK Socialist government also lost credibility in 2011 when then finance chief Evangelos Venizelos – now serving in the coalition led by Samaras’ New Democracy Conservatives as his Deputy Prime Minister/Foreign Minister – stiffed investors with 74 percent losses in a desperate bid to write down its debt.

Bradshaw’s comments came just a few days after Samaras declared, in a televised New Year’s message, that Greece “Will return to the markets and start to become a normal country again.”

He also claimed that the “worst is over” but PIMCO, along with a raft of other analysts, isn’t buying it. Bradshaw said under the present conditions that a nine-year Greek bond would have an 8% interest rate, far higher than Greece would pay if it just took out another loan.

The German newspaper also cited the President of the German Institute for Economic Research (DIW) Marcel Fratzscher, who said he’s convinced that Greece will require a new rescue package from the Eurozone despite Samaras’ insistence there will not be a third bailout Fratzscher said Samaras’ comments were “politically motivated”.