Greece plans two bond issues by year-end to raise about 4 bln euros, sources say

Greece plans at least two more bond issues this year to raise about 4 billion euros, bringing borrowing to the upper end of projections as it looks to consolidate a presence on debt markets and cope with increased pandemic costs, two government officials told Reuters on Thursday.

The Finance Ministry said in December it planned to raise 8-12 billion euros on the bond markets this year to cover maturing debt and help pay for state support for businesses and workers hit by Covid-19 lockdowns.

“We are planning at least two more issues by the end of the year to raise about 4 billion euros,” a government official with knowledge of the matter told Reuters.

Greece, which expects a fiscal deficit of 3.9% of GDP for 2021, has raised 8 billion euros so far this year from a 30-year issue in March, its first such maturity in almost a decade, as well as from a 10-year issue and a private placement in January.

A second official said the government retained the option of reopening existing bonds or issuing new ones but gave no details.

Athens plans to spend more than 14 billion euros this year to support businesses and employees left out of work due to the lockdown. It spent about 24 billion euros in 2020 in subsidies and loans to companies to maintain jobs.

In addition to its own borrowing, it expects to receive more than 6 billion euros from the European Union’s recovery fund and SURE unemployment scheme in 2021.

Greece has seen its borrowing costs fall below 1% from about 2.5% in the 10-year duration after being included in the ECB’s Pandemic Emergency Purchase Programme last year, despite junk credit ratings.

Ratings agency S&P raised Greece’s rating by a notch to ‘BB’ last week but said that the prospect of regaining a coveted investment grade score remains some way off.

Greece, which is rated Ba3 with a stable outlook by Moody’s, returned to international bond markets in 2017 after being locked out for years during a decade-long debt crisis from which it finally emerged in August 2018.

The country has accumulated a cash buffer of about 30 billion euros, enough to cover at least two years of maturing debt, assuming outstanding T-bills are rolled over. 

[Reuters]