Five-year bonds likely to be issued as early as next week

Moody’s is expected to upgrade Greece’s credit rating on Friday By Sotiris Nikas

Athens is set to officially announce its return to the money markets with the issuance of a five-year bond for an estimated 2-3 billion euros. Sources also suggest that the announcement could come after a likely credit rating upgrade by Moody’s over the course of Friday.

Though there has been no confirmation from government officials, market professionals familiar with the issue have told Kathimerini that the pre-marketing process will likely take place on Monday with book building starting the following day in a bid to make the most of optimistic sentiment regarding Greece after the successful conclusion of talks with the country’s creditors and the vote of confidence by the Eurogroup and Ecofin council meetings earlier this week.

Should the issuance go ahead, it will be the first time Greece has tapped the financial markets since 2010, when it entered the bailout process. The yield of the benchmark 10-year Greek bond fell to a four-year low on Thursday at 6 percent, which, according to the Financial Times, paves the way for a successful return to market borrowing.

Reuters reported on Thursday that the banks to spearhead Greece’s efforts to return to normal borrowing will be Deutsche Bank, Bank of America Merrill Lynch, JP Morgan and Goldman Sachs, although this may change. “This is the most important deal Greece will do,” the same report quoted an unnamed banker as saying.

Moody’s is expected to issue its scheduled review of Greece’s credit rating, which is almost certain to signal an upgrade, after keeping it at C – i.e. junk status – since March 2012, though Standard & Poor’s and Fitch have made upgrades since.

Moody’s said in a report on Thursday that the ratification of a multi-bill of reform measures on Sunday constituted a “credit positive” for the country. It did, however, warn of political risk following the further shrinking of the government majority.