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  HOME | Business & Economy (Click here for more)

Greece Issues First 10-Year Bond Since Before Bailout

ATHENS – Greece is launching its first 10-year bond sale in nearly a decade on Tuesday, benefiting from investors’ appetite for relatively higher yields and capitalizing on the recent upgrade by Moody’s Investors Service.

The Greek government aims to raise around 2 billion euros ($2.27 billion) from the issue, but the deal size could be bigger, Greek officials said.

The country opened the books on a syndicated offering with an initial price target of 4.125 percent, according to an Athens bourse filing and the lead manager banks, but given the strong demand for the bond, the final yield has been set at 3.90 percent.

At around midday local time, order books were in excess of 11.3 billion euros, one of the lead managers said.

Athens’ timing for the new issuance is favorable, as the country’s borrowing costs have dropped in recent weeks.

The country’s left-led government, which faces general elections later this year, is eager to show that the economy is returning to normality and Greece is back on foreign investors’ radar.

On Friday, ratings company Moody’s upgraded Greece by two notches to B1, citing a successful economic-overhaul program, improved fiscal performance and more sustainable levels of public debt.

Greece issued its first post-bailout bond in January, when it raised 2.5 billion euros in a five-year bond, priced with a yield of 3.6 percent.

The success of that bond sale paved the way for the longer-term issue.

“The deal is not about immediate financing needs, given Greece’s large cash buffers,” Mizuho’s rates strategists said.

Mizuho’s strategists said they saw the fair value for the new bond at around 3.81 percent, but expect the final pricing Tuesday closer to 20 basis points cheaper than this.

Since the end of Greece eight-year long bailout era, the return to the bond markets has been bumpier than the government initially expected.

Last summer, Athens was forced to scrap plans for bond issues as a result of market jitters over Italy and Turkey. Greece aims to raise some 7 billion euros from international markets in 2019.

The last 10-year bond was issued by Greece in March 2010 when the government raised 5 billion euros with a 6.25 percent interest rate.

It was a high-stakes effort in the early days of a credit crisis that eventually rocked global markets and led to Greece’s painful series of bailouts.

The lead manager banks of the upcoming issuance are BNP Paribas, Citi, Credit Suisse, Goldman Sachs International Bank, HSBC and J.P. Morgan.

 

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