Crisis Over?

Greek_FlagRemember Greece? As in: “the nation that can’t pay the interest on its government bonds, and will almost certainly default and take down the entire European Union banking system with it?” Or: “the nation that all the ‘experts’ predict will exit the Eurozone and print enough Drachmas to pay off its crushing debt burden?”

Last week, Greece returned to the bond market for the first time in four years, selling $4 billion worth of 10-year government bonds at a surprisingly low aggregate interest rate of 4.75%. Eager investors actually oversubscribed the offering.

The country has been bailed out twice in the last 48 months, and its (smaller) annual bond auctions have been purchased by the International Monetary Fund and banks under the direction of the World Bank–which, of course, can be seen as closet bailouts. This is the first time since 2009 that actual investors purchased the country’s debt instruments.

As it turns out, investors who speculated on Greece’s existing (distressed) debt, betting that the country would continue making interest payments, may have been the biggest winners. Because of the growing confidence in repayment, existing Greek bonds returned an aggregate 33% over the past 12 months, according to statistics compiled by Bloomberg. The country’s unemployment rate, while still in the mid-20 percent range, is falling, and there are clear signs of economic recovery. Of course, not all news is good; as the bonds were sold on the global markets, the country’s labor unions were busy forcing schools to close and bringing the nation’s public transport system to a standstill. Ordinary workers are still protesting the government’s austerity measures, even though they finally seem to be working.

Sources:

http://www.bloomberg.com/news/2014-04-10/greece-readies-bond-sale-as-athens-car-bomb-reminds-of-upheaval.html

http://www.ft.com/intl/cms/s/0/404ef5ba-bf17-11e3-8683-00144feabdc0.html#axzz2ysrh4nll

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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