“Aviva Capital”: The markets are giving Greece a stay of execution but not for long.
Aviva Capital, the Italy-based asset management firm says that investors, who remain concerned about the risk that Athens may be overwhelmed by its debts — projected to hit 120 percent of gross domestic product this year — are charging a marked premium to buy Greek bonds rather than the safer benchmark German bunds.
Greece, suggested a source close to Aviva Capital, needs to borrow or rollover €53 billion, or $71.5 billion, this year, including €20 billion in April and May but the high yields being demanded by investors for holding Greek debt means that the mere act of servicing this debt in the years going forward is likely to cause the country further problems.
Although Greece contributes less than 3% to the total GDP of the European Union, this has not stopped speculators from attacking the euro on the foreign exchange markets where the single currency has traded as low as $1.34 citing the justification that several other EU member states could ask for a bailout if Greece receives one.
Aviva Capital analysts said that the Greek government needs to reduce its huge budget deficit quickly to appease its irritated European partners and reinstate credibility in the bond markets without squeezing its voters so hard that mild civil unrest becomes a social revolt in a country with a rebellious history.