Three months after Greece’s successful return to the international market, the Finance Ministry is testing investors’ intentions for a second time with the issue of three-year bonds.
The ministry announced on Wednesday that international banks have been mandated to manage the euro-denominated issue, while “the transaction will be launched and a price set in the near future, depending on market conditions.”
The government stating its decision in spite of the unrest observed in the markets on Wednesday due to a Portuguese bank missing a short-term debt repayment deadline, illustrating that Greece is no longer as sensitive as it was to such external events.
Sources say that the book will open on Thursday morning and close late in the evening or on Friday morning at the latest. The aim of the Public Debt Management Agency (PDMA) is to draw between 2 and 2.5 billion euros, but bids permitting, this could climb to 3 billion euros.
There were strong indications on Wednesday that investors would cover the amount sought. Given the current market conditions, the interest rate of the new bonds will likely range between 3.2 and 3.5 percent.
The ministry is keeping a low profile regarding the new issue, with officials stressing this is a very different case to that of the five-year bonds issued in April. The investing public that is interested in three-year paper is not the same as that for five-year bonds, so offers this time are not expected to reach up to 20 billion euros.
That would by no means deem the issue a failure. After all there are two main reasons for Greece’s new turn to the markets: to stay in touch with investors following the success of April’s issue and to further normalize the Greek yield curve, as there is no three-year bond in the local market. The next step will be for Greece to issue a seven-year bond, which is also missing.
There is also the practical reason of safeguarding the state’s liquidity in view of its August obligations, which add up to 6.7 billion euros.