After three successful bond issues in the year’s first half, including two during the coronavirus crisis, Greece will make another market foray in September or October.
The Public Debt Management Agency (PDMA) has so far drawn 7.5 billion euros from the 15-year paper issued in January, the 7-year bond in April and last week’s 10-year note. This keeps it within the original target range of €4-8 billion for 2020, making Greece the sole country in the eurozone not to have expanded its issue needs, while most member-states have already doubled their issue programs for this year to finance their economic support programs.
Greece could in theory stay out of the markets for the rest of the year, as in combination with its treasury bill issues, which have grown in size, the country has more than enough in its cash reserves to fund its support measures. However, Athens intends to stay in contact with the markets and the investment community.
Although it is too early for any definitive decisions, given the uncertainty regarding the course of the pandemic in the coming months, the PDMA plans include one or two issues from the fall onward, adding up to €1.5-2 billion. That would bring Greece’s total issue activity this year to a maximum of €9.5 billion, with most analysts expecting the sum to come to €10 billion
These PDMA moves are aimed at maintaining the country’s cash buffer at a minimum of €30 billion through the end of the year, so that Greece will have a safety cushion during the aftermath of the pandemic. That is something the markets will likely reward then.
After the €3 billion drawn last week the cash reserves add up to €35 billion, and will rise to €38 billion on Thursday.
In March the government had calculated it would utilize between 14 and 17 billion euros from the cushion to finance economic support measures. That target remains valid, with some €8.5 billion already used; however, this has not become obvious in the cash buffer mainly thanks to the moves of the PDMA, which keeps replenishing the funds used by the government via bond issues and T-bill auctions.
Therefore, by year-end, another €8.5 billion will have been used from the cash buffer so that at end-December it will still come to €30 billion.