Athens eyes new five-year bond issue

The government is now preparing to add Greece’s return to the money markets to its list of pre-election arguments, with the aim of supporting its narrative that the economy is back to normal.

Bond market sources say that although Greek bond yields remain at particularly high levels – 4.3 percent for the benchmark 10-year debt – preparations have already started and, conditions permitting, Athens may tap the markets as early as the end of January or within the first few months of the year. They add that this would require that the government does not enter a crisis due to a coalition breakup and that the climate is favorable when the creditors’ representatives begin their next visit to Greece on January 21.

With plans for a 10-year bond issue shelved due to its prohibitive yield, government plans now concern a five-year note of a smaller value, around 2-2 billion euros, market sources add, stressing that this would be a new title and would not entail the recycling of the 2014 issue maturing in April.

The five-year yield currently stands at 3.3 percent, so an issue with a rate of up to 3.7 percent would be acceptable, market officials argue, as that would also enhance the government’s narrative.