By Sotiris Nikas
The government is moving ahead with its plan for emancipation from its international creditors through the issue of new sovereign debt, with the Finance Ministry speeding up its efforts so that the bonds can be successfully issued at the end of April.
Sources say that major investment firms and funds have approached the Public Debt Management Agency (PDMA) to learn the Greek government’s intentions regarding the new bond. There have been some 200 contacts with investors around the world since last summer, including top credit institutions such as Deutsche Bank, Bank of America Merrill Lynch, JP Morgan, Morgan Stanley, UBS, Barclays, Goldman Sachs, Nomura, HSBC and Credit Suisse, who wish to play a leading role in the new issue.
People familiar with the discussions have told Kathimerini that the market is ready to invest in a new Greek bond. They add that a number of the funds that recently contributed to the share capital increases of local lenders are waiting for the Greek state to issue fresh debt for them to purchase.
The most likely scenario regarding the technical characteristics of the new bond provide for a five-year maturity period, although the possibility of a three-year bond has not yet been ruled out. The amount the state will seek to borrow ranges between 1.5 and 2 billion euros and the Finance Ministry’s aim is for an interest rate of below 6 percent.
A key factor that will determine the timing of the issue as well as its terms is the spread between the Greek bond yields and those of Portugal. At the moment this spread amounts to around 250 basis points, with the government’s aim being its reduction to 200 bps if not further.
The first issue planned for April will have a water-testing character, given that it will not be meant to cover the country’s funding needs. However it will also be highly symbolic, signifying Athens’s return to the markets after four years in the wilderness of the bailout process. It is further intended to show that international investors have confidence in the Greek economy. The government does not see Greece covering all its funding needs through the markets before 2016.