New bond issue considered within July
Greece is ready to make its next foray into the money markets this month, with the Public Debt Management Agency (PDMA) just waiting for a nod from the new government as low bond yields not only allow but also demand such an initiative.
PDMA technocrats believe that the right time to tap the markets is from next week up to end-July and possibly the first half of September. After that point, negotiations with Brussels ahead of Greece’s fourth post-bailout assessment would not allow any secure forecasts, as there could be turbulence on the horizon. The technocrats argue that the sooner the bond issue is made, the better.
Reuters reported on Monday that officials from two banks that are key negotiators said the issue could even take place this week, but PDMA believes it makes more sense to avoid such a rush.
Sources say that PDMA had already prepared for a new bond issue some time ago but the snap election put a freeze on the initiative. In the meantime, the positive course of bond prices continued and the election result has supported the markets’ favorable attitude.
Despite arguments expressed in favor of a 15-year bond issue, PDMA officials do not believe it would be wise to proceed to an issue in excess of 10 years. They prefer a more conservative approach with regard to the duration (for a 10-year, a 5-year or even a 3-year issue) as well as the amount (around 3 billion euros). “We do not want to appear adventurous,” sources say.
After all, it has been said that the existing money suffices to cover all of the country’s needs up to 2023, at least in theory, with the PDMA having already covered 5 billion out of the 7 billion euros of bond takings it had scheduled for the entire 2019 through the issues made so far this year.
Market professionals say that although the 10-year bond yield is very low, at 2.10 percentage points last night, it stands far above that of the similar Portuguese yields, which explains the strong interest in Greek paper.
“Now is the right time for a new issue,” the same market professionals stress.