Greece pins hopes on luring investors in US and far east

The Greek government is planning trips to the US and the far east to lure investors and calm the markets, as the country's debt crisis worsened today. It is believed that Greek officials will visit the US in mid-April, and also plan to travel to China and other Asian-Pacific countries soon. The US fundraising, denominated in US dollars, could be in the region of $5bn (£3.27bn). Activist bond investors are demanding more details about a potential bailout plan for Greece but, so far, European Union officials have failed to provide them. The agreement signed last month, in which the EU said it would stand by its member countries and accepted help from the International Monetary Fund, was not specific enough, bond investors said. "The financial situation in Greece is unsustainable without some kind of support from Germany or the IMF," said Ashok Shah, chief investment officer at London & Capital, a sovereign bond investor. "If the cost of servicing your debt is higher than your nominal economic growth, your total debt rises so you can't fund your interest payments." Investors were alarmed after media reports showed the finance minister, George Papaconstantinou, saying the country's weak growth would force an upwards revision of the budget deficit estimate. Greek bonds fell for a second day, pushing the 10-year bond yield 14 basis points higher to 7.16% – more than twice what Germany has to pay to borrow from the international markets. The premium that investors demand to buy Greek bonds over the rock-solid German bunds rose to 407 basis points, the highest since the euro was launched in 1999. Papaconstantinou said Greece could not afford to borrow at current rates for long. "The situation will become non-viable – something dramatic must happen," Shah said. "The default risk is rising. Somebody has to come in and guarantee that Greece will meet its commitments, like Germany or the EU, or the IMF." The cost of insuring Greek bonds against a potential default rose for a third day to $400,000 for $10m – up from $390,000 the previous day, according to Markit data. Greece needs to raise another €35bn (£31bn) this year to refinance its debt, of which €10.5bn must be raised by the end of May. The country has said it has already reached its funding targets for April. Investors such as Pimco, the world's largest asset manager with $1tn of funds under management, say they want to see more evidence of Greek budgetary discipline before buying its bonds. The country has pledged to cut its budget deficit from 11% to 3% of GDP by 2013.