Athens ponders bond issue timetable

Despite Greece’s scheduled exit from the bailout program in three weeks’ time, Greek bonds have not seen any recent improvement, demonstrating that investors remain reserved about the country’s prospects – and sending Athens a clear message that returning to the market will be no walk in the park.

The yield of the benchmark 10-year sovereign bond reverted to an upward course on Monday, climbing to 3.973 percent. It therefore remains a long way from the 12-year low of 3.60 percent it had reached in late January. Meanwhile, the yield on seven-year debt rose to 3.45 percent on Monday.

Fund managers have told Kathimerini that an issue of a three- or five-year bond would be more feasible for Greece, as an issue of 10-year paper would be far from certain to succeed at the moment.

The climate on international markets remains unsettled and liquidity is at particularly limited amounts. At the same time the US funds that did not take part in last November’s swap do not appear willing to exchange the old Greek debt they hold for new paper.

A report by Bloomberg on Monday referred to the challenge Athens is facing in its hopes of sustainably tapping the capital markets, noting that the Greek authorities will have to stick to their pledges to the country’s creditors to retain the credibility created by the completion of the bailout program. It also mentioned the political risk, citing that the government may lose its parliamentary majority in early 2019 if deputies are asked to approve the agreement with the Former Yugoslav Republic of Macedonia.

Therefore, according to statements by government officials that the news agency cited, Athens is planning to announce a timetable by the end of the year for the country’s return to the markets in 2019, and to repeat the same move every year. The goal is for Greece not to issue any new debt beyond that which matures each year.

Maturing bonds will amount to 10-11 billion euros in 2019, while for the two years after that the amount will drop to 5 billion euros. Therefore Greece will not need to issue any more than two or three bonds per year, and if there is any need for more, the country could reopen previous issues, according to one of the officials cited. September could prove a good time for Greece to issue its next bond, another official stated.