Greece seen blocked from debt markets until 2017

June 25 (Bloomberg) -- Greece may have to wait at least another five years before it can sell bonds to investors, according to financial institutions that trade debt with European governments.

A new administration in Athens and signs that European Union leaders are willing to loosen Greek austerity measures failed to convince primary dealers that the country will be able to return to the market before its second bailout ends in the next three years.

Three of 20 companies surveyed by Bloomberg News that deal directly with sovereign bond issuers expect it to take at least a decade before Greece issues debt again. Ten say investors would lend money to the country no sooner than 2017, while five predict 2015 at the earliest. The median forecast was a minimum of five years.

“The challenges facing Greece remain extremely large,” said Jamie Searle, a fixed-income strategist at Citigroup Inc. in London. “It will be a long while before they can get back to the market.”

Greece last sold bonds in March 2010 before the extra yield that investors demand for holding its 10-year securities instead of German bunds ballooned the next month to 443 basis points, then a euro-era record. That forced the country, facing 8.5 billion euros ($10.7 billion) of bond repayments, to start bailout talks with the EU, the European Central Bank and International Monetary Fund.

Ten-year Greek debt yielded 25.74 percentage points more than German bunds as of 3:25 p.m. London time today.

Possible Exit

Analysts at New York-based Citigroup said there’s a 50 percent to 75 percent chance that the nation will exit the euro region in the next 12 to 18 months. Their view hasn’t changed since before the June 17 election.

Antonis Samaras was sworn in last week as prime minister, Greece’s fourth since November, after his New Democracy party won the vote. He is under pressure to tackle the nation’s debt crisis with the economy in a fifth year of recession and unemployment at 21 percent.

Greece won a second bailout this year from the EU and the IMF, taking the total rescue package to 240 billion euros. Under the country’s bailout program, Greece has to reduce its budget deficit to 7.3 percent of gross domestic product this year from 9.3 percent in 2011, and cut its primary deficit, which excludes interest payments, to 1 percent from 2.4 percent.

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