Market tapping came late, not early

 Acting responsibly will ensure the country its funding from bonds even without troika monitoring

By Dimitris Kontogiannis

Greece won a battle but not the war against economic stagnation by accessing the international bond markets for the first time since 2010. However, the successful sale of the five-year bond could mark a significant turn in the economic adjustment program, improving the chances for GDP growth and leading to the country’s exit from the current form of financial assistance in early 2015. The exit should become a priority for the government and its official lenders since market discipline and the Fiscal Compact rules are also effective means of supervision.

We, like very few others, have been proponents of the country’s access to the markets much earlier than last week. As a matter of fact, we have been arguing in favor of such a move since last summer. In our opinion, the benefits of tapping the markets would have been greater than the costs, namely the higher interest rate paid initially on a small amount of loans. By picking the right time, the country’s earlier access to the markets would have improved sentiment faster, accelerated the decline of yields and helped more local corporations raise money in international markets. The latter would have made it easier for Greek banks to provide credit to other, smaller domestic companies. These are some of the positive side effects the government and the lenders expect from the sale of the five-year bond.

There is no doubt the sale of the five-year bond after four years in exile reflects investors’ increased confidence in the country but also their own calculations for a favorable yield-risk trade-off. The low comparable yields offered by other eurozone countries and...