Greece to issue new 10-year bond, considers 30-year debt at low rates

Greece said yesterday it would issue a new 10-year government benchmark bond as part of its syndicated issues for this year and that it was even considering issuing bonds of more than 30 years. «We will seek about -5 billion from the (10-year) issue. Next week we will proceed with the issue and pricing of the bond,» Spyros Papanicolaou, head of Greece’s Public Debt Management Agency (PDMA), told Reuters. Greece’s government has said it plans to raise about 35 billion euros this year, about 4 billion euros more than last year, partly because it has to pay off maturing debt issued in the past. «The bond should sell well,» said Wee-Khoon Chong, a bond strategist at Bank of America in London. «January is the busiest supply month in the eurozone.» Citigroup, Emporiki Bank, JP Morgan, Piraeus Bank and UniCredit Group will jointly manage the sale of the bond. Separately, Deputy Finance Minister Petros Doukas said the government was considering issuing debt with a maturity of more than 30 years. «We will proceed only if there are very good opportunities,» Doukas told a news conference. Greece is moving toward issuing longer-term debt as historically low interest rate levels have made long-term bonds more attractive to investors. Bank of America’s Wee-Khoon Chong commented, «If you buy the view that Greece will see growth of around 4 percent going forward, it makes it easier to issue 30-year debt.» Greece, borrowing under the name of the Hellenic Republic, is rated A1 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings. The spread between the Greek July 2016 10-year benchmark bond over the comparable German 10-year benchmark bond is 25.6 bps. Ten-year paper is the most actively traded Greek bond. Greece, which joined the eurozone in 2001, is struggling to reduce its debt as a percentage of GDP. This is projected to drop to 100.4 percent in 2007 from an estimated 104.3 percent in 2006, but the government keeps borrowing more to plug the budget deficit. (Reuters)

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