Recently upgraded Greece will – barring any major surprises – issue its first ever 15-year bond on Tuesday, with the book set to open early in the morning.
International lenders Barclays, Bank of America, BNP Paribas, Goldman Sachs, HSBC and JP Morgan are the joint lead managers of the issue and the aim is to draw around 2 billion euros (between 1.5 and 2.5 billion), although the precise amount has not yet been decided and will depend on the final level of the interest rate.
Sources say that the initial estimate on the starting interest rate is about 1.90 percent, which would be very good news as it would not push Greece’s average borrowing rate above this level; therefore, as the European Stability Mechanism has noted, Greece will be able to proceed with a second payment to the International Monetary Fund this year earlier than due.
The Public Debt Management Agency could not possibly find a more favorable moment for the issue of this bond, which constitutes a milestone both for Greece’s prospects and local banks. Besides the boost from the credit rating upgrade by Fitch on Friday, taking Greece’s rating to within two notches of investment grade, the concerns about the coronavirus in China – which shifted investor priorities away from stocks and toward the safe haven of government bonds – and the positive news from Italian politics work in favor of Greek bonds.
In this context all Greek debt maturities saw their yields drop on Monday to new all-time lows, with the benchmark 10-year bond yield reaching the level of 1.16 percentage points.
The choice of a 15-year note constitutes the next step for the PDMA after last year’s three-, five- and 10-year issues on the way to the country’s full return to the markets.
This issue is also an important test for the PDMA as the new bond will mature in 2035, one year outside the time frame during which the country’s creditors have determined that the national debt will be sustainable.