Little appetite for new bond

Greece’s sale of a new five-year government bond met with less-than-usual demand yesterday at a time when risk-averse investors prefer German benchmark debt. Some traders complained that only 1.5 billion euros’ worth of paper was offered, dousing interest in the 4.0 percent August 2013 issue. In total 1.695 billion euros’ worth of the issue was sold following an additional tender, the Greek debt agency said. The auction was subscribed 2.19 times, compared with 3.26 at the previous sale of a five-year bond on December 11 and with 3.67 achieved at the debut of the 4.1 percent August 2012 bond. One trader in London said Greece sold far too little of what was to become a benchmark issue. «At less than 2 billion euros, this paper will not get listed on EuroMTS and will be rather illiquid. We expected Greece to offer 3-4 billion euros. Now they will have to tap the paper regularly to get up to benchmark size of 5 billion euros,» the trader said. «As well as a poorer bid-to-cover ratio, the bid premium versus lowest accepted price was at a discount of 1 cent and bid premium versus average price was 6.9 cents,» said Stanislaw Malek, bond analyst at Bank of America. Malek said that according to his records this was the first time a Greek bond auction met with a discount. Greece’s debt agency had no comment on this but said it was satisfied with the auction’s results. «The new benchmark bond will have a size of above 5 billion euros in 2008,» a PDMA official said. Before the auction, the yield spread on Greek 10-year benchmark bonds over Bunds surged to 72 basis points – the widest since the country joined the eurozone in January 2001 – from 39 basis points at the end of February. Greece has an A+ grade from S&P and is rated A1 by Moody’s. (Reuters)

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