Almost six months after Greece’s exit from the bailout program and one year after the issue of a seven-year bond, the government has finally decided to return to the markets, under the most conservative and safest conditions possible, with the announcement of the issue of a new five-year bond.
The book is expected to open on Tuesday, at a moment that has been cautiously selected to follow the voting in Parliament on the deal between Athens and Skopje and the successful bond issues by Italy (a 15-year paper) and Spain (a 10-year note).
Even so, the Greek issue aspires to draw only a small amount, with sources speaking of just 2 billion euros, while there were noises on the bond market on Monday about the prospect of a reissue: Observers pointed to the maturity of the new bond, which a statement to the Athens Stock Exchange placed in April 2024, so that there is an option of a new opening of the issue.
The market anticipates an interest rate of around 3.5 percent, and the government will be keen to score political points by comparing it with the issue by Antonis Samaras’s government in 2014 that had a rate of 4.95 percent.
Danske Bank chief bond analyst Jens Peter Sorensen told Kathimerini that one of the biggest challenges for the new bonds at the moment is that they are unable to attract long-term investors, and demand tends to mostly concern hedge funds. It would be a positive signal to the markets only if we saw more long-term investors, he argued.
A five-year issue is a good starting point for Greece so that it gains full access to the market, as a 10-year bond would be too big a challenge for the country, DZ Bank analyst Sebastian Fellechner noted to Kathimerini. “Greece may not need the liquidity, but it is necessary to be in close contact with the investment community and the primary market,” he added.
Gianluca Ziglio, senior fixed income analyst at Continuum Economics, argued that the bond will meet with satisfactory demand, with the size of the issue not exceeding 3 billion euros, as was also the case with the seven-year paper issued last February.