Bond issue a multiple success

Greece raises 3.5 bln euros from the markets with investor demand being exceptionally high

Bond issue a multiple success

At a single stroke on Tuesday, the Public Debt Management Agency managed to beat the volatility and pressures expected to be caused by the continued tightening of European Central Bank monetary policy and the national elections, and to cover 50% of the 2023 loan program with its first market foray of the year.

With the syndicated issue of its new 10-year bond, the Greek state raised 3.5 billion euros (of the €7 billion targeted for the whole of 2023), following strong demand from 230 domestic and international investors, with 22% distributed to Greek banks and 78% to international investors, of which 11% are hedge funds, 74% fund managers and banks, and the rest central banks and pension funds.

Demand exceeded €21.9 billion and was one of the highest ever collected by a Greek title. The amount drawn was also at the top of the range of Greek debt issues, as the last time the PDMA raised €3.5 billion was at the issuance of a 10-year bond in February 2021.

The interest rate on the new 10-year note was set at 4.279% – i.e. 165 basis points above the average euro swap (2.63%) – and slightly lower than the initial interest rate that was set with a spread of 175 bps. plus the mid-swap – with a price of 99.782 and a coupon of 4.25%. However, thanks to the active portfolio management strategy that the PDMA has implemented in recent years, over-hedging the interest rate risk, the real cost for the state from the new issue will be well below 3%, at 2.6%.

The PDMA therefore managed to take advantage of the strong investor demand for eurozone bond issues since the beginning of the year, despite the large supply of securities expected in 2023 due to the absence of ECB support, as well as the start of quantitative tightening.

The second factor is the elections. Given that the election process can be time-consuming and cause market volatility, the PDMA prefers to cover a significant portion of the year’s issuance activity early. This means a second foray is possible before spring.

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