February bond sale news hits spreads
The Greek government intends to follow up Monday’s 8-billion-euro bond auction by issuing 10-year government paper next month in news that created a fresh wave of upward pressure on the premium demanded by investors to hold Greek debt. Greece plans to issue a 10-year bond via a syndicated deal in February to raise 3-5 billion euros, Public Debt Management Agency (PDMA) chief Spyros Papanicolaou said yesterday. The government paid a high premium for the 8 billion euros it raised on Monday from its first bond sale this year, part of its 53-billion-euro borrowing plan for 2010, but showed markets it is facing no problem funding its deficit and debt. So far this year, Greece has tapped markets for more than 13 billion euros via a private placement of floating rate notes, T-bills and the 5-year benchmark bond on Monday which was priced to pay investors 6.2 percent and was heavily oversubscribed. According to local press reports, some 70 percent of bonds sold went to foreign investors with the remainder being snapped up by local banks. Meanwhile, the premium demanded by investors to hold 10-year Greek government debt rather than benchmark German Bunds rose yesterday after news of the upcoming bond sale. The 10-year Greek/German government bond yield spread widened seven basis points to 303 bps after the announcement. The spread had narrowed to below 300 basis points on Monday.