Sovereign bond issue for the record books
The new 10-year bond issued on Tuesday by the Greek state made history, as it achieved three parallel records.
The records are that it collected the largest bid book ever recorded for a Greek government bond, as it exceeded 35 billion euros, it closed with the lowest spread achieved in a Greek issue – at 80 basis points above the average swap rate of the euro, while it is the largest 10-year bond issued since 2010, at €4 billion.
The process of issuing the first government bond since Greece regained investment grade took just two hours, with impressive demand that had the issue almost nine times oversubscribed.
Therefore the Public Debt Management Agency, with the injection of €4 billion and with an interest rate of 3.478%, has effectively covered from January 40% of the total loan needs of 2024 (projected at €10 billion).
The particularly increased investment interest is thanks, on the one hand, to the fact that Greek bonds now have a larger audience of investors due to their inclusion in international indices, and to the strong demand for government issues in general as investors rush to lock in high yields before the start of the interest rate cut cycle of the European Central Bank.
From 10.10 in the morning Greek time, when the issuance process began, until 11.45 a.m. – that is, 30 minutes before it was completed – the offers of investors for the Greek 10-year bond had exceeded €30 billion. At 12.15 p.m. and while the yield had been compressed by 5 bp to the final 3.478% (i.e. 80 basis points above the mid-swap, against 85 bp originally set) offers had exceeded €35 billion. This amount includes €1.425 billion paid by the underwriting banks of the issue.
Therefore, the new 10-year note, which has an annual coupon of 3.375% and matures on June 15, 2034, achieved record demand, surpassing the €30.3 billion of bids that had gathered the 10-year note of €3.5 billion that had been issued (and reissued) in 2021 during the Covid period where ECB support was strong.
In addition, participation in the new Greek 10-year offer book was one of the largest on record, as it came from more than 290 investors with 87% of them being international investors, while 65% of the issue was allocated to real money investors, 30% in banks and just 5% in hedge funds.
