Greece was set to raise 2.5 billion euros from its first 30-year bond sale in more than a decade on Wednesday, with the issue more than 10 times oversubscribed, the public debt management agency said.
The bond, which has so far received investor demand of more than 26.1 billion euros, will price later on Wednesday at 150 basis points over the mid-swap level, resulting a yield of about 1.93%.
Greece has been a key beneficiary of the European Central Bank’s pandemic emergency bond-buying program, which holds down government borrowing costs in southern European countries.
The bank, which doesn’t buy Greek debt as part of its mainstream bond purchases, included it in the pandemic program despite Greece’s junk credit ratings. That pushed Greek 10-year bond yields to record lows late last year.
BNP Paribas, Goldman Sachs, HSBC, JPMorgan and National Bank of Greece were appointed to jointly lead manage the issue maturing on January 24, 2052.
The issue continued Greece’s return to the markets after three bailouts during the euro zone debt crisis and underlined the sharp change in sentiment since the turmoil of those years.
Richard McGuire, head of rates strategy at Rabobank in London, said Greece’s deal was “reflective of the fact that the concerns around euro area cohesion seem to be something of a distant memory”.
“This ongoing positive sentiment regarding the eurozone periphery is notably alongside a very significant deterioration of euro zone peripheral fundamentals, specifically the very sizable jump in debt stocks due to the coronavirus,” he said.
Greece last issued a 30-year bond in 2008, a year before the start of a debt crisis that threatened to tip it out of the European single currency. After regaining market access in 2017, it has gradually been issuing longer-dated bonds, venturing out to a 15-year maturity last year.
A banker with knowledge of the matter said despite the problems posed by the coronavirus, the success of the issue, which allowed Greece to build out its yield curve, was “a vote of confidence to Greek economy from investors”.
Taking advantage of ultra-low interest rates, Greece plans to borrow up to 12 billion euros this year and has already raised 5.5 billion euros with the reopening of a 30-year bond through a private placement and a new 10-year bond issue in January.
The risk premium Greece pays on top of German bonds for benchmark 10-year debt is currently around 120 basis points, near its lowest since 2009, according to Refinitiv.