Spreads widen with plans for auction

Investors demand for Greek 10-year government bonds rose to 269 basis points (bps) over the eurozone’s benchmark yesterday after Greece mandated the sale of a syndicated 10-year bond issue. Although initial price guidance has not yet been provided by the five banks handling the syndicated sale, a repricing of Greek debt was already under way. «The process is already fully in place, with Greek bonds underperforming across the curve. Some bonds trail by more than 10 basis points,» said David Schnautz, a bond analyst at Commerzbank in Frankfurt. «Now people have a fresh reason to push the ‘sell Greece button.’ This should only be the first wave – and the second will take place when a juicy spread guidance will be announced,» he added. Early yesterday, the 10-year GGB yield was seen at 265 bps over German 10-year Bunds, compared with 263 bps before Greece announced its decision to proceed with the bond’s issuance. Greece’s public debt management agency said yesterday it had hired five banks to help it sell the new benchmark bond, its third such sale this year. According to sources, bids for the 10-year bond had reached 6.5 billion euros, exceeding the 3 billion euros the government hoped to raise from the sale. (Reuters, Kathimerini)

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