New Greek seven-year bond out on Tuesday

Greece will be making its first foray into the money markets under the new, center-right government, issuing a seven-year bond that will be the third debt issue this year, on Tuesday, according to sources.

The Public Debt Management Agency (PDMA) said on Monday that it has authorized Barclays, Bank of America Merrill Lynch, Deutsche Bank, Morgan Stanley, Nomura and Societe Generale to run the book for a new seven-year issue, which the market anticipates to fetch some 2.5 billion euros at a rate of under 2 percent.

PDMA said the issue will take place “in the near future,” but Kathimerini understands that this will take place on Tuesday, following an agreement between the agency’s technocrats and the Finance Ministry.

PDMA has already made two bond issues, a five-year and a benchmark 10-year note, collecting 5 billion euros that came close to the annual target for 7 billion. This new issue will likely overshoot the target, but the government intends to carry out even more market forays over the rest of the year, market conditions permitting.

Analysts speak of a window of opportunity for a new Greek issue, as the country’s sovereign bond yields have recently tumbled to historic lows, with the benchmark 10-year yield falling four points on a daily basis on Monday to 2.31 percentage points.

The ministry places particular emphasis not so much on the amount to be drawn or the interest rate to be achieved, but on the quality of investors who will position themselves in this issue.

Sources noted that Athens is eager to give the markets a signal about the credibility of Greek bonds, nine days after the general election and the change in government, as this will also have a positive impact on the cost of borrowing for local businesses.

PDMA has long prepared for this market foray, but the snap election postponed its plans.

Market sources have told Kathimerini that the issue of a new seven-year bond will also be useful at this stage to bridge the gap in the Greek yield curve, along with bringing some much-needed liquidity to the country’s bond market.