Greek crisis legacy tests Samaras bidding to end market exile

By Marcus Bensasson & Mark Evans

Antonis Samaras’s mission to end Greece’s exile from bond markets faces a reality check this week as data shows how deeply the economy remains mired in deflation with the worst jobless rate in the euro area.

Fresh from his success last week in securing the release of bailout aid, the Greek prime minister’s ambition to tap investors is chafing against the legacy of his country’s debt crisis. Statistics due April 10 will show unemployment above 27 percent and consumer prices falling from a year earlier for a 13th month, according to Bloomberg surveys of economists.

Growing confidence among officials on the prospect of selling debt has risen as bond yields have fallen to a four-year low. Their optimism rests on the premise of persuading investors that Greece will shake off a six-year recession that remains a parable for European Central Bank policy makers focusing on the dangers of deflation for the region as a whole.

“There are still a number of open questions regarding Greece, particularly with regards to the sustainability of debt,” said Gianluca Ziglio, executive director of fixed-income research at Sunrise Brokers LLP in London. “If you have a very large unemployment rate, you need to support it with social welfare measures if you want to avoid social unrest, which is obviously going to weigh on the budget.”

Unemployment probably stayed at 27.5 percent in January, according to the median of seven economist estimates in a Bloomberg survey. Consumer prices probably fell 1.1 percent in March from a year earlier, according to another survey, also of seven economists.

As Greek 10-year yields reached the lowest since March 2010 last week, Finance Minister Yannis Stournaras...