Diaspora bond being finalized
The government hopes to unlock the debt market by issuing a diaspora bond in the coming months. Until then, the state will keep raising funds by auctioning treasury bills, such as on Tuesday, when it raised 650 million euros.
Finance Minister Giorgos Papaconstantinou said Tuesday that Greece still believes it will tap the debt market in 2011, adding that it ?will issue the diaspora bond in the coming months.?
The bond will target investors of Greek descent in the US, Canada and Australia.
?Our goal is to draw funds from the very large Greek community abroad,? said the minister.
The ministry expects the green light from regulatory authorities in each of the three countries in the next few months. It will then finalize the terms of the government paper.
Greece?s goal is to issue a bond at an interest rate of less than 5 percent, the rate at which it is paying for the 110-billion-euro finance package from the International Monetary Fund and the European Commission. This is seen as helping send a message to the markets that Greece has access to cheap finance in order for fixed-income investors to start investing in Greek debt once again.
The ministry is looking into issuing a diaspora bond of between three and 10 years, or possibly a one-year bond. Greece does not expect to raise more than a billion euros from the diaspora bond, a source said.
Meanwhile, the Public Debt Management Agency (PDMA) raised 650 million euros on Tuesday by selling 13-week T-bills at 4.1 percent, unchanged from the previous auction in November. Eighty percent of the amount sold was snapped up by foreign investors, according to PDMA chief Petros Christodoulou.
Separately, the government insisted yesterday it was not seeking a repayment extension of its overall debt, hours after Deputy Prime Minister Theodoros Pangalos voiced support for the idea.
?We have an initial decision from the IMF and the EU on the extension of the 110-billion-euro loan, in order to bring it in line with Ireland. The Eurogroup has agreed to it in principle,? Papaconstantinou said.
