Greece has attracted record orders for its first 15-year bond sale since the financial crisis, a crucial step in furthering the thrice bailed-out country’s capital markets comeback.
Investor demand for the 2.5 billion euro bond exceeded 18.8 billion euros, the biggest order book since Greece returned to the international bond market in 2017 after a debt crisis that locked it out for years.
After issuing bonds of up to 10 years’ maturity since then, Greece is looking to extend the term of its debt.
This week’s sale followed a debt swap last week with the National Bank of Greece that led to a new 30-year bond.
To be able to get this sort of [order] book ... at this maturity is impressive for them,” said a banker familiar with the deal who asked not to be identified.
“Going out to 15 years is a sort of exclusive club. Not every pension fund, long-term investor wants to buy every credit, so it’s a sign of increasing trust in Greece.”
The bond, which is expected to be priced at 165 basis points over mid-swaps, will yield around 1.87 percent, according to Reuters calculations – roughly what Greece paid to issue seven-year debt last summer.
The bond sale was announced on Monday after Fitch Ratings upgraded Greece’s credit rating on Friday to BB with a positive outlook, citing economic growth and fiscal prudence leading to government debt sustainability.
The positive outlook raised hopes for Greece’s eventual return to an investment-grade rating, which would make its bonds eligible for the European Central Bank’s bond-buying programme. Those expectations pushed its 10-year bond yields to a three-month low, near record low levels.
The Greek debt agency has two main financing scenarios for 2020 in mind, depending on the amount of early debt repayments. One of these focuses on reducing its 12.6 billion euro stock of T-bills by issuing government bonds.
“I think if they potentially use longer-dated debt versus financing in the bills market, it’s obviously positive as ... you always want to see lower front-end maturities should the economic environment and the situation not turn out as expected,” said Andrey Kuznetsov, a senior portfolio manager at Hermes Investment Management in London.