Greece to reopen three- and five-year bonds

Greece plans to reopen its recent three- and five-year bond issues in the next two weeks, to top them up by as much as 1.5 billion euros, accepting treasury bills as payment instead of cash, a senior government source told Reuters on Monday.

The debt exchange is aimed at improving the functioning of the secondary bond market, boosting liquidity and tightening spreads.

By retiring up to 1.5 billion euros of outstanding treasury bills, Athens will also have the margin to reissue the same amount in new 12- or 18-month T-bills.

Its outstanding stock consists of three- and six-month treasury bills.

“There is a plan to reopen these issues in the next couple of weeks. Payment will be in outstanding T-bills instead of cash,” the government official said on Monday on condition of anonymity.

Athens returned to international bond markets this year for the first time since it was forced to request a first international bailout in 2010, with a five-year bond issue in April and a subsequent three-year issue in July, raising a combined 4.5 billion euros from foreign investors.

The country has enjoyed a revival in investor sentiment in recent months and seen bond yields fall along with those of other countries in the eurozone periphery.

Athens has a stock of about 15 billion euros of outstanding treasury bills and refinances them on a monthly basis.

“The move to reopen the recent bond issues is also aimed at giving Greek banks a more active role in the secondary market so they can play their part as primary dealers,” the official said.

Greece’s three-year bond issue in July raised 1.5 billion euros, less than Athens expected, as worries about the health of a parent company of Portugal’s largest listed bank hit demand for riskier eurozone debt.

Investor sentiment has picked up since then.

After nearly crashing out of the eurozone in 2012, the country expects to return to economic growth this year following a six-year recession that has shrunk its economy by a quarter.