ECONOMY

Greece plans new 30-yr syndicated bond by end-Jan

Greece will issue a new 30-year benchmark government bond by the end of January, boosting its presence in this area of the maturity spectrum, a senior government official said yesterday. Greece began stretching its maturity horizon with 30-year paper in 2005. Borrowing successfully, it came back for more last year, bringing the total outstanding amount of these bonds to -9 billion. The new January issue will be its third. «The syndicated issue of 30-year paper is scheduled to take place by the end of this month,» the official told Reuters. The country’s debt management agency (PDMA) said Credit Suisse, HSBC, Lehman Brothers, Morgan Stanley and National Bank of Greece would lead manage the sale of the bond, maturing September 20, 2040. The bond is part of Greece’s planned syndicated issues for the first half of this year. Borrowing under the name Hellenic Republic, Greece is rated A1 by Moody’s and A by both Fitch and Standard & Poor’s. It aims to cut its debt-to-GDP ratio to 100.4 percent this year from an estimated 104.3 percent in 2006. Greece is building up its presence further out on the yield curve. Healthier public finances and a positive rating outlook recently have helped tighten spreads across the entire curve. Officials have said they are looking at 50-year paper. «We feel more confident in our 30-year issues. This is where one sees what the market really thinks of credit quality. Risk is higher than 10-year paper as investors commit funds for a longer period,» the government official said. Earlier this month, Moody’s rewarded Greece’s efforts to rein in its budget gap and sustain growth with a positive outlook on its bonds – the first major ratings agency to applaud its fiscal progress. It forecast the -200 billion economy, one of the fastest-growing in the eurozone, will sustain its robust expansion pace over the medium term, with fiscal consolidation helping reduce public debt. «The market is pricing us more favorably, there has been a positive impact reflected across the entire Greek government bond yield curve,» the official said. The spread of Greek 30-year bonds over German bunds has shrunk to 34 from 40 basis points, yielding 4.47 percent. Greece’s recent 10-year bond issue, priced at 30 basis points over bunds, has also seen its spread tighten to 25 bps. Economists do not rule out more positive news flow from ratings agencies this year. «Greece’s spread outlook is positive. One may expect further outperformance this year versus core eurozone benchmarks due to the country’s improving fiscal picture,» said economist Platon Monokroussos at EFG Eurobank. «There is also scope for positive action from major ratings agencies,» he said. (Reuters)