Are things really OK or is this “Whistling By the Graveyard: The Illustrated Edition?”:
Concerns over a possible debt crisis in Greece eased yesterday after huge demand for the Greek Government’s first bond issue of this year.
Greece had planned to sell €5 billion (£4.4 billion) of new five-year bonds to investors, but, after about €25 billion of demand emerged, it decided to issue €8 billion.
Frankly, it seems to early to tell. But at least for now, it’s hard to dispute the notion that the market sees Greece’s troubles as idiosyncratic. Over at FT Alphaville, they have a good article that highlights this.
I might be a bit more cynical, but I think the market has turned its attention away from Greece to Davos, Bernanke’s confirmation, and Volcker’s proposed ban on prop trading by the banks. Once the two events are out of the way and everyone realizes how politically inexpedient Volcker’s idea is, stuff like this and Dubai will draw people’s attention again.
In the meantime, just remember that Greece is merely at the “tip of the spear” as it relates to other Eurozone countries that are in trouble. And as such, the broader complex of countries in the PIIGS has consequences for the Euro.
But I have a sinking feeling the Greeks will look back on this and kick themselves in the behind for not issuing more. The credit market still has problems so you have to be selective in terms of issuance and really maximize the amount you want to issue because you can’t be sure when the window to the market will be open and how long it will be open for.