Record low rate in bond issue

Record low rate in bond issue

Greece’s cash reserves received a 2 billion-euro boost on Wednesday from the reopening of last January’s 15-year bond, which saw impressive demand from investors, with offers exceeding €16.75 billion.

Greece broke another record on Wednesday, as the issue’s yield amounted to 125 basis points plus the European mid-swap, coming to just 1.18 percentage points; this is not just lower than the original issue in late January (with the interest rate at 1.91 percentage points), but also beats the record from the re-issue of the 10-year bond just last month, which had an interest rate of 1.187%.

This is performance is particularly significant for the country, which has managed to make its fifth market foray this year – the fourth during the pandemic – while attracting significant demand from quality investors, in their majority.

At the same time, it is doing so with record low interest rates, indicating that this global crisis might be a golden opportunity for Greece.

Finance Minister Christos Staikouras stressed that these developments and the numbers serve as confirmation of the confidence of international markets in the management and the prospects of the Greek economy.

The size of the 15-year bond has now grown from €2.5 billion in January to €4.5 billion, so as to satisfy investor appetites, increase the overall appeal of Greek sovereign bonds and make Greece a more “mature” market.

The day of the reopening of the 15-year debt was carefully selected, in order to follow – and not coincide with – the issue of the European Union’s social bonds, which attracted orders of €233 billion to the double issue. The idea was to precede a new Italian foray and avoid the strong fluctuations and pressure on the markets from the upcoming US election and the resurgence of the pandemic across Europe, which is expected to increase investor fears. It is these same elements that will also determine whether Greece will tap the markets until the end of the year.

The Greek state has drawn €12 billion from the market so far this year, a sum already covered by the European Central Bank purchases (€13 billion).

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