New foray into the bond markets by Greece

New foray into the bond markets by Greece

Greece is set for a new foray into international bond markets for medium- and long-term borrowing, on the most favorable terms, following the particularly promising developments in the markets, including the decline in Greek 10-year bond yields below the 3,5% for the first time since January 2006, and the consequent spread contraction against the Italian spread below 100 basis points.

The bond’s duration, the amount of borrowing and the exact time to tap the markets have not yet been determined, but the duration of 3 or 7 years and the amount of 2 to 2.5 billion euro respectively are examined as a possible scenario and at any time (probably within a week). It is also worth mentioning that Standard & Poor’s are likely to proceed with an upgrade of the Greek economy from “B” to “-BB”.

In the government bond market, the Greek ten-year bond fell yesterday afternoon by 5 basis points, moving to the area of 3.46%. This yield has fallen by 29 basis points on a monthly basis and by 52 basis points per year. It is worth mentioning here that the yield of the Greek five-year bond fell to 2.28%, dropping by two percentile points lower than the corresponding five-year US bond yield.

With regard to a new foray to the bond markets, the State Debt Management Agency is seriously considering the scenarios for a three-year and/or seven-year bond issue for an amount between 2 and 2.5 billion euros each, and maybe a re-opening of some of the existing issues targeting 1 to 1.5 billion euro.

IMF summit

A clearer picture is expected after the Spring International Monetary Fund summit in Washington on Friday 12, when the details will be determined between Greece, Europeans and the Fund for the early repayment of part of the 9.7 billion euro owed by Greece to the international organization.

According to sources, the government plans to repay the expensive part of the IMF loans, namely the 2019 and 2020 instalments, amounting to 3.8 billion euro, with a very high interest rate of 5.13%.