02/21/2010 (12:30 pm)
Greece Replaces Debt Chief as Deficit Crisis Batters Markets
Greece replaced its debt management chief as declines in the country’s bonds roil European markets.
Petros Christodoulou, general manager of treasury and global markets at National Bank of Greece SA, the country’s biggest lender, will take over from Spyros Papanicolaou as head of the Athens-based Public Debt Management Agency, the country’s Finance Ministry said yesterday in an e-mailed statement.
“The incoming guy is walking into a tough mandate,” said Charles Diebel, senior interest-rate strategist at Nomura International Plc in London. “Such is the sentiment towards Greece at the moment, a new broom could be a positive.”
Greek bonds have slumped in the past two months, driving yields to the highest in 10 years, on concern the government will struggle to narrow a budget deficit that is more than four times the European Union limit. Prime Minister George Papandreou’s government needs to sell 53 billion euros ($72 billion) of debt this year, the equivalent of 20 percent of gross domestic product.
Papanicolaou, a former central bank official, was appointed general director of the debt office by the previous New Democracy government in January 2005. His predecessor, Christopher Sardelis, had held the role since 1999, when the organization was created.
“I’m not stepping down,” Papanicolaou said in a telephone interview yesterday. “It’s normal” that a new government changes staff, he said. “It’s a long tradition. Whether it’s good or not, that’s another story,” he said.
Rising Yields
The Greek government is under pressure to show that it can reduce a budget deficit that was equivalent to 12.7 percent of gross domestic product last year after the EU this week stopped short of offering financial support.
The yield on Greek two-year notes has remained above 5 percent, the highest in the euro region, even after officials this week urged the nation to reduce the deficit. The premium investors demand to hold the notes instead of benchmark German securities has held above 4 percentage points, the most since the Mediterranean nation joined the euro and more than 10 times its 37 basis point average the past decade.
The yield on two-year Greek government notes yesterday rose 31 basis points to 5.67 percent. The 10-year bond yield added 16 basis points to 6.54 percent.
“It’s a very challenging job,” Papanicolaou said. “We are going through a very difficult period.”
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