Window of opportunity for bond issue
Turnover in the secondary market of Greek state bonds quadrupled on Monday from the average daily amount of 120 million euros so far this year to reach €479 million, the highest level since the beginning of 2021. Notably, €303 million of that concerned purchase orders, which is associated with the purchases that the European Central Bank is making through its extraordinary Pandemic Emergency Purchase Program (PEPP).
Given that scenarios regarding the reduction of the ECB’s purchase rate after the June executive council meeting have begun to grow – a prospect that would put pressure on eurozone bonds – this opens a window of opportunity for Greece’s Public Debt Management Agency (PDMA) in order for it to proceed with a new market foray; it would then be able to make the most of the particularly favorable circumstances that the buying furore of the ECB has created, before Frankfurt decides to put on the brakes.
Last month the ECB announced that in the current quarter it will significantly increase securities acquisitions in the context of its PEPP program. Its objective is to maintain the favorable funding conditions in the eurozone, after the pressure on the bloc’s bonds in the previous months.
According to data Frankfurt released on Monday, in the week to April 16 it bought securities totaling €16.29 billion under the PEPP umbrella, down from €17.073 billion and near the weekly average. Its total bond purchases till last Friday added up to €943.65 billion, leaving another €907 billion available until the portfolio of €1.85 trillion is exhausted.
The ECB actually appears to have raised its buying rate of Greek bonds this month, following the relatively slow pace in February and March when its had acquired a combined total of €2.986 billion – the second lowest 60-day tally since the launch of the PEPP.
In total the eurozone’s central lender has acquired Greek bonds worth some €22 billion over the last 13 months, more than covering the entire issuing activity of the PDMA. It therefore has the scope for another €15 billion of Greek bond purchases before the conclusion of the program, in March 2022.