Greece launches first bond sale since 2014, as IMF cuts UK growth forecasts - business live
All the day's economic and financial news, as Athens looks to end its three-year banishment from the markets
- Latest: Greece to sell debt again...
- ..also offering to buy back some existing debt
- Deal could help Athens return to the markets
- Six banks hired to handle the deal
Earlier:
- Eurozone companies post growth in July
- IMF cuts UK growth forecast to 1.7% this year
- IMF report: The Key Points
5.25pm BST
Another day of thrills and spills is over in the City, and 1% has been wiped off the value of the biggest firms lister in London:
London Stock Exchange update: FTSE 100 closes at 7,377.73, down 1.01%
#FTSE 100 biggest risers: Micro Focus (+1.48%) / Anglo American (+1.19%) / Burberry Group (+0.55%)
#FTSE 100 biggest fallers: Reckitt Benckiser (-3.27%) / Next (-3.06%) / Provident Financial (-2.92%)
5.12pm BST
Greek bonds rallied today after news of the new debt sale and buyback hit the wires.
This has been welcomed by politicians in Athens, as our correspondent Helena Smith reports:
"[it] coincides with the decisive restitution of economic stability and the recovery of the country. Now it is the responsibility of all of us to not repeat the mistakes of the past but to build a new Greece."
3.53pm BST
It's not been a great day in the City for shares.
The FTSE 100 index is down 86 points, or 1.1% at 7365 points, with most stocks losing ground.
The FTSE was consistently the market's worse performer this Monday, dropping nearly 90 points to plunge back below 7400.
There were multiple reasons for the index's decline, from the IMF cutting the UK's 2017 growth forecasts, to sterling's rebound and notable losses from the likes of easyJet, Next and Reckitt Benckiser.
3.40pm BST
If you're just tuning in, here's our news story about Greece's plan to issue fresh bonds for the first time in three years.
Related: Greece plans return to bond market as Athens sees end in sight to austerity
3.31pm BST
Here's the latest from Athens:
Greek PM's Office: Bond Issue Important Step Towards Greece's Full & Viable Market Return - RTRS
3.08pm BST
Another newsflash from America, but this one is less encouraging.
The number of home sales slumped by 1.8% in June, suggesting the housing market may be cooling.
US 'Existing Home Sales' lower than expected for June . . . pic.twitter.com/hfFktELuWv
Existing home sales fall 1.8% in June, miss estimates at 5.52 million units ...
Not looking good ...
2.55pm BST
Newsflash! America's private sector is growing at its fastest pace since January
US companies are expanding in July, thanks to a boom in new orders that is driving employment up.
US flash #PMI surveys signal fastest growth for 6 months in July (though merely signal c2% GDP growth) https://t.co/fuZAZcD1Ow pic.twitter.com/tCq1ez5Jd9
"The overall rate of expansion remains modest rather than impressive. The surveys are historically consistent with annualized GDP growth of approximately 2%, but the signs are that growth could accelerate further in coming months.
"Most encouraging was an upturn in new order inflows to the second-highest seen over the past two years, which helped push the rate of job creation to the highest so far this year, indicative of non-farm payrolls growing at a rate of around 200,000.
2.33pm BST
Wolf Piccoli of Teneo Intelligence believes this bond sale is meant to give Alexis Tsipras some respite from political pressures back home.
He writes:
The government of Prime Minister Alexi Tsipras is pushing ahead with a bond issue. This is part of an attempt to gain some breathing space amid domestic political problems. The government would like to raise around a4bn; the bond is a switch and tender offer for a a3bn euro-bond issued by the Samaras government in 2014, which matures in April 2019.
Athens will also issue new euro-denominated fixed rate notes due in 2022 for cash. The related tender process will take place on 25 July.
#Greece poll projection [MetronAnalysis]:
ND 37%
Syriza 22.2%
Golden Dawn 8.3%
PASOK & allies 8.1%
KKE 8%
EK 3.8%
Potami 2.7%
IndGrks 2.7%
2.16pm BST
Greece's new foray back into the financial markets will play a big role in setting the mood ahead of its expiry of its a86bn bailout next year.
If it attracts strong interest from investors it will play a crucial role in quashing suggestions that the debt-stricken country requires a new credit line, or fourth bailout, at that time to keep default at bay.
1.55pm BST
That was quick!
Yanis Varoufakis has hit back at Alexis Tsipras's criticism over his tenure as finance minister.
Either I was the right choice to spearhead the "collision" with the troika of Greece's lenders because my plans were convincing, or my plans were not convincing and, thus, I was the wrong choice as his first finance minister.
Arguing, as Mr Tsipras does, that I was both the right choice for the initial confrontation and that my plan B was so vague it wasn't worth the trouble of even talking about is disingenuous, albeit insightful, for it reveals the impossibility of maintaining a radical critique of his predecessors while adopting the Tina (There Is No Alternative) doctrine.
1.45pm BST
Greece's prime minister set the scene for this week's debt sale by telling the Guardian that the worst of the debt crisis was now over.
In an interview with my colleague Helena Smith published today, Alexis Tsipras declared that:
"We can now say with certainty that the economy is on the up " Slowly, slowly, what nobody believed could happen, will happen. We will extract the country from the crisis " and in the end that will be judged."
"Perhaps the moment will come when certain truths are told ... when we got to the point of reading what he presented as his plan B it was so vague, it wasn't worth the trouble of even talking about,....
It was simply weak and ineffective."
#Greece - my interview with prime minister Alexis Tsipras in the #Guardian this morning https://t.co/fspWKVyrnY
1.25pm BST
This chart shows how Greek bond yields have receded from their crisis-era heights, as confidence has slowly returned.
Greece is tapping the bond markets two years after it was bought to the brink of a eurozone exit https://t.co/aBNmmMXlTX pic.twitter.com/io2pEaGvMM
1.15pm BST
Greece's offer to buy back some of its existing five-year bonds is good news for investors.
Anyone who bought the debt last year, when they traded below their face value, can now sell them back for a profit:
Greece is offering to buy 2019 bonds at 102.6% of face value. If you bought back in February at 90, you're laughing now pic.twitter.com/r9zcWYeaiq
1.10pm BST
The Greek finance ministry has set a goal of a 4.2% interest rate on the bond, reports Helena Smith in Athens.
But banking sources believe that will be hard to achieve and say an interest rate of between 4.3% to 4.5% is much more likely.
12.56pm BST
Why is Greece launching a new bond sale now?
One reason is that Greek bonds have been strengthening in recent weeks, showing that investors believe the risk of default has fallen.
The a4bn 4.75% 2019 bonds have been trading at a record low yield, bid below 3.5% according to Thomson Reuters prices, making it an opportune time for the country to issue its first deal since 2014.
12.42pm BST
Guardian Business has launched a daily email.
Besides the key news headlines that you'd expect, there's an at-a-glance agenda of the day's main events, insightful opinion pieces and a quality feature to sink your teeth into each day.
Related: Business Today: sign up for a morning shot of financial news
12.39pm BST
As well as issuing new bonds, Greece is inviting investors who hold its existing five-year bonds to redeem them.
Those bonds expire in 2019, but Athens is prepared to swap them for cash now.
12.18pm BST
Breaking news from Athens! Greece's government is returning to the financial markets for the first time since 2014.
Six banks have been hired to bring new five-year bonds to the markets, two years after Greece nearly plunged out of the eurozone altogether.
The Hellenic Republic, rated Caa2/B-/CCC/CCCH, has mandated BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs and HSBC as joint lead managers for a five-year euro bond, according to a lead.
The issue is subject to market conditions and the results of a concurrent switch and tender offer.
Greece mandates six big banks to lead manage 5-year bond issue. 5-year yield now 3.6%. In March 2012 it was a touch higher at 63%.
#BREAKING -- #Greece announces 5-year bond issuance in next days, hires underwriters
*GREEK GOVT TO SELL BONDS FOR FIRST TIME SINCE JULY 2014
I'm sure this will be as successful as the last one :)
12.09pm BST
The IMF's downgrade growth forecasts have caused a stir in Westminster this morning.
John McDonnell MP, Labour's Shadow Chancellor, has just issued a statement, saying:
"Today's report from the IMF is yet another blow for the Government and its continued austerity agenda that is holding our country back.
"It further reveals that this government has no real plan for Brexit and no real plan to deal with the problem of earnings not keeping up with prices, which is undermining growth and risking living standards.
"These figures underline how the uncertainty and loss of confidence caused by the Brexit vote is hampering our economy. If the Government persists with its plan for a hard and destructive Brexit, our growth figures are likely to get even worse.
"Leaving the largest trading bloc in the world for an inferior deal will not be offset by the illusory promise of quick new trade deals with other countries around the world. The result will be less trade that leaves us all poorer.
11.33am BST
Have you ever popped a new bag of crisps open, only to find it contains more air than deliciously fried potato? Or found yourself curiously peckish after wolfing down your favourite chocolate bar?
Weight changes occur most often in food products rather than any other item category. There are also consistently more reductions across both the food category and non-food items.
However, despite some media speculation, there has not been a change in trend since the EU referendum - our data shows that shrinkflation has been used in practice consistently across the past 5 years.
Though not sure anyone can quite match the @CadburyUK Milk Tray sold by @Poundland, which has just 7 chocs inside. pic.twitter.com/fBr3AL1AWh
Kettle Bites. 95 calories - for a very good reason. Just 11 and half crisps last time I checked. https://t.co/nRKqKiziSI
10.45am BST
The IMF's new forecasts highlight the dangers posed by the Brexit talks, says Mihir Kapadia, CEO of Sun Global Investments.
He writes:
"With the IMF's growth forecast for the UK cut from 2% to 1.7% for the year, this means there is again a focus on the debate about the effect of Brexit on the country's business. While the IMF's downgrade has been based on 'tepid performance', the ultimate impact of Brexit continues to remain unclear. The key factor which threatens to derail the economy and significantly reduce market confidence is the potential for either the Brexit talks collapsing or reaching stalemate.
At the moment, there appears to be negligible progress on the talks and the IMF certainly would have factored the risk of talks stalling in reducing their economic growth forecast."
Key point about IMF revisions is this: UK being revised down while Eurozone is being revised up pic.twitter.com/4omdpSHgeH
10.37am BST
Here's a handy reminder of today's IMF forecast changes:
IMF downgrades UK growth forecasts @StatistaCharts @Statista_UK Growth of 17% expected this year ... pic.twitter.com/z427MVt2Yn
10.23am BST
A wave of anxiety is sweeping through Europe's stock markets this morning.
In London, the FTSE 100 index has shed 64 points or 0.9% to 7388.
The FTSE has suffered a rude awakening to the new week, with the gains of last week clearly left in the rear-view mirror. One of the biggest drags we have seen has come from the airline sector, with Ryanair's warning of a potential air fare war in the coming months leading to sharp falls for easyJet and IAG, the owner of airlines including British Airways, Iberia and Aer Lingus.
This morning the IMF cut its growth forecast for the UK for the first time since the EU referendum over a year ago. Chief amongst its concerns is the tepid economic performance seen in the first quarter of 2017, with the enactment of Article 50 coinciding with a deterioration in both business and consumer confidence.
10.15am BST
UK businesses should heed the IMF's warning that Britain's economy is weakening, says Markus Kuger, Senior Economist at Dun & Bradstreet:
"The IMF's downgrade reflects the undercurrent of political and economic uncertainty in the UK, as the impact of Brexit on the economy remains unclear. The first quarter of the year saw a mediocre economic performance and Dun & Bradstreet rates the level of risk in the UK as 'deteriorating'.
The slow progress of Brexit negotiations is creating considerable unpredictability for businesses operating in and with the UK. This has only been intensified by the results of the general election in June, as the government's narrow parliamentary majority is further complicating the process of leaving the EU.
9.35am BST
The International Monetary Fund's new growth forecasts are getting plenty of coverage this morning.
The Financial Times reports that the Fund expects the "broadest synchronised upswing" in a decade.
Better growth in China, the euro zone and Japan is making up for a slower-than-expected US economy and Donald Trump's stalled economic promises as well as a faltering UK, the International Monetary Fund said on Monday.
In its latest update, the IMF left its April forecasts for 3.5 per cent global growth this year and 3.6 per cent next year unchanged. But the lack of change in the world's headline growth masked what the IMF said was a rotation in the sources of growth.
The International Monetary Fund has lowered its growth forecast for the UK to 1.7% for 2017.
The organisation said a weaker than expected performance meant it was revising expectations from the 2% it predicted in April.
The International Monetary Fund kept its growth forecasts for the world economy unchanged for this year and next, although it revised up growth expectations for the eurozone and China.
In an updated World Economic Outlook published on Monday, the IMF said global gross domestic product would grow 3.5 percent in 2017 and 3.6 percent in 2018, unchanged from estimates issued in April.
IMF says Brexit will have a "mild negative" affect on the UK economy. Not quite as bad as Mme Lagarde spelt out in 2016 (1/2)
But the IMF downgrade for 2017 shows how business is worried. More the political games carry on, the more the investment taps will turn off
"Opposite of IMF view" remains the most reliably accurate way of forecasting the UK economy
9.24am BST
Here's Julien Lafargue, European Equities Strategist at JP Morgan, on today's eurozone PMI reports:
Following one of the best quarters in the past six years, a slowdown in the Eurozone's pace of expansion was to be expected. Yet, economies in the region continue to grow strongly, and the details of today's survey point to a continuation of this trend in the coming months.
Encouragingly, the recent strength of the Euro does not appear to be cited as a concern at this point with new export order growth in Germany's goods producing sector accelerating slightly in July.
Good #EURO morning! The euro continues to rise, now at 1.1670 against the #USD, highest level since January 2015. pic.twitter.com/sXM34nqLFH
9.12am BST
Breaking: Companies across the eurozone are continuing to expand robustly, although growth has dipped to a six-month low.
That's according to Markit's latest healthcheck on the euro area, including this morning's figures from France and Germany.
#Eurozone PMI slightly lower in July. Still at levels suggesting strong growth. pic.twitter.com/4Q1gXlkQF8
"The July fall in the PMI indicates that the eurozone's recent growth spurt lost momentum for a second successive month, but still remained impressive.
"The survey data are historically consistent with GDP rising at a quarterly rate of 0.6%, cooling slightly from a pace of over 0.7% signalled for the second quarter.
8.47am BST
Germany's 'flash PMIs' have just been released, and they suggest private sector growth has hit a six-month low.
Manufacturing and service sector companies in Europe's largest economy reported that activity rose at a slower rate this month.
The easing seen in July follows the strongest quarter in six years, and manufacturing continued to expand at a historically sharp rate. New export order growth in the goods- producing sector accelerated slightly and suppliers remained under substantial pressure.
8.29am BST
Boom! France's factories are enjoying their best month since 2011, thanks to a surge in new orders.
French PMI Manuf beats, Services missed
"Steep increases in output and employment were key takeaways from the latest release, with manufacturing firms noting the quickest rise in staff numbers for nearly 17 years.
"Further increases in total new orders and backlogs suggest that companies will continue to ramp up output and add to payrolls going forward, and marks a solid start to the second half of the year."
8.14am BST
Despite cutting its UK and US growth forecasts, the IMF still thinks the global recovery is 'firming'.
That's because it revised up its growth expectations for the eurozone to 1.9% this year, up from 1.7% in April.
Growth has been revised up for Japan and especially the euro area, where positive surprises to activity in late 2016 and early 2017 point to solid momentum.
China's growth projections have also been revised up, reflecting a strong first quarter of 2017 and expectations of continued fiscal support. Inflation in advanced economies remains subdued and generally below targets; it has also been declining in several emerging economies, such as Brazil, India, and Russia....
7.59am BST
The IMF has also cut its growth forecast for the US, having concluded that Donald Trump will struggle to deliver the infrastructure plan he promised.
Growth this year has been cut from 2.3% to 2.1%, while 2018's forecast has been slashed from 2.5% to 2.1%.
While the markdown in the 2017 forecast reflects in part the weak growth outturn in the first quarter of the year, the major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U.S. fiscal policy changes.
Market expectations of fiscal stimulus have also receded.
7.55am BST
Britain's finance ministry has responded to the news that the International Monetary Fund have cut their UK growth forecasts this year.
"This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important."
7.46am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A new week brings new concerns over Britain's economy.
"The ultimate impact of Brexit on the United Kingdom remains unclear."
Related: IMF cuts 2017 growth forecasts for UK and US
The day's main data release are 'flash' PMIs for the euro area, France and Germany. These are the readings for July so will provide an important indication of how the euro area economy has begun Q3.
The June readings pointed to a slight loss of momentum at the end of the second quarter but that was coming off their highest level in six years in April and May and, at 56.4, the average composite reading for the quarter was still pointing to activity picking up from Q1.
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