On Wednesday – barring any unforeseeable developments – the Greek state will make its fourth market foray this year – its third during the coronavirus pandemic – through the reopening of the 10-year issue it launched in June. The aim is to boost the state coffers, which have been financing the economy in the face of the coronavirus pandemic.
Analysts say it is important for Greece to tap the markets before before the anticipated congestion in the eurozone over the next couple of months. The foray will also take place before the issue of the second-quarter growth data that the Hellenic Statistical Authority will issue on Thursday and could cause some turbulence in the market.
The Public Debt Management Agency on Tuesday appointed six international banks – Barclays, IMI-Intesa Sanpaolo, Morgan Stanley, Citi, Nomura and Société Générale – to be the joint lead managers for the reissue of the 10-year paper issued in June with a yield of 1.568% and a coupon of 1.5%. Notably, the managers are not the same as in June, when Greece had commissioned the services of Goldman Sachs, BNP Paribas, BofA Securities, Deutsche Bank, HSBC and JP Morgan.
The statement said the issue will take place “in the near future,” depending on market conditions, but market sources agree the books will open this morning, even if the yield of the benchmark 10-year bond rose slightly on Tuesday to 1.148% after the announcement of the issue.
The amount to be raised will depend on the bids, as was the case in June when 3 billion euros was eventually collected; this time around the market estimates the amount will come to €1.5 billion. The interest is expected to be below that of June, at around 1.20%.
The PDMA had made a similar move (i.e. reopening a 10-year issue) in October 2019. The idea behind it, both then and now, is for the market to obtain some depth as the size of the issue will grow and the confidence of investors who have acquired previous issues will increase.