Greece seen tapping the bond market in September

Greece seen tapping the bond market in September

International analysts see the possibility of Greece tapping the bond market once again in September, perhaps for the final time this year. 

On the other hand, Greece’s plan to issue a green bond in the second half of 2022 is very likely to be put off for next year, because of unfavorable market conditions.

Green bonds are designed to fund specific environmental projects, including those aiming to mitigate the effects of climate change.

Initially, the government had planned to tap the bond markets for €12 billion in 2022. This target, without explicitly stating so, has been reduced to €10 billion and may be further cut to €8 billion if market conditions continue to deteriorate.

So far this year, the sale of Treasury bonds has brought in €6.9 billion, of which €3 billion from the 10-year bond, €1.5 billion from the reopening of the 7-year one, €1 billion from a new 5-year, floating rate bond and €1.4 billion from auctions of reissued PSI (Private Sector Involvement) bonds.

According to estimates made by Citigroup and Societe Generale analysts, the state will tap the market for €2.5-€3 billion, despite the prevailing volatility. The city believes the new issue will be a 15- or 20-year bond, while Societe Generale expects a 10- or 15-year one.

In its analysis, Societe Generale notes that the Public Debt Management Agency will likely issue a conventional bond and not a green one, since the guidelines for the issuance of one and the projects it would fund, have not been issued.

The government has already instructed a private primary dealer to design the green bond’s structure and, apparently, the process is at an advanced stage; however, the Finance Ministry would not like the country’s first such bond to fall flat due to the difficult conditions created by the energy crisis, the inflation and the European Central Bank’s monetary tightening.

This issue, when it finally takes place, is hoped to improve the country’s brand name in the debt markets, will help broaden the investor base and, if successful, will reduce the cost of borrowing.

In the whole of the EU, bonds worth €771 billion have been issued so far in 2022, with another €320 billion expected by the end of the year.

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