Agency aims for more innovation
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Agency aims for more innovation

The expected improvement in public finances is expected to produce a lower public borrowing requirement in 2006. The government predicts that the debt-to-GDP ratio, which is still the highest in the eurozone, will fall to 104.8% in 2006 from an estimated 107.9% in 2005 and 109.3% in 2004.

Greece plans to borrow about €30 billion in 2006, compared with an estimated €37 billion last year, according to Spyros Papanicolaou, director general at Greece’s Public Debt Management Agency (PDMA). He points out that the final gross borrowing number may differ from that initial sum. The 2005 target had been €34 billion.

On December 13, the PDMA announced its borrowing schedule for the first quarter of 2006, which includes the auction of a three-year bond in March and a 10-year syndicated loan. Greece will also reopen its 4.5% loan expiring on September 20 2007 via a syndication and issue 13-, 26- and 52-week treasury bills in January.

Greece is unlikely to follow the example of other EU sovereign issuers such as France and the UK by issuing a 50-year bond, says Papanicolaou: “We are not looking into it. The execution risk is high and few banks are active in that segment of the curve where hedge funds and other funds are present for reasons that have to do with convexity.”

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