Greece is very close to a new bond issue, as sources say the government is examining a plan providing for the immediate auction of three-year debt to make the most of the very favorable conditions in the market at the moment thanks to the low interest rates and the positive climate among investors regarding the course of the Greek economy.
The Finance Ministry’s first objective is to convince Monday’s Eurogroup to approve the disbursement of the 1-billion-euro sub-tranche as a result of Greece’s full implementation of the six required prior actions. If that happens, then it is certain the ministry will immediately move ahead with the bond issue. Some sources are even saying that if everything goes according to plan, the issue will take place by July 10.
That date has not been plucked out of thin air, as on July 9 the representatives of the country’s creditors are scheduled to start their inspection. This may not be considered one of the toughest Greece has undergone and it is set to be quickly wrapped up by July 17, but there is always the risk of negative news arising during the inspection that could create problems with the new issue.
The state will attempt to draw between 2.5 and 3 billion euros, which would provide a cash reserve cushion ahead of August’s hefty obligations that amount to 6.7 billion euros. Market professionals who are closely following developments say that the responsible officials at the ministry have been in close contact over the last couple of days with the international firms that will run the issue.
According to sources there will be six book runners, with the main candidates being Bank of America-Merrill Lynch, Deutsche Bank, Goldman Sachs, Citi, JPMorgan, Morgan Stanley, Nomura, HSBC, UBS and BNP Paribas.
Taking into account the low interest rates in the market today, analysts say Greece could secure a rate around 3 percent or even less for a three-year bond issue. After all the yield of the five-year debt issued in April is currently at its lowest point (4.11 percent), from 4.95 percent upon sale.