Successful 7-year bond issue a vote of confidence in gov’t

The government hailed Tuesday’s seven-year bond issue as a vote of confidence in Greece’s growth prospects, after the country’s third market foray this year was more than five times oversubscribed and attracted significant interest from long-term investors.

Greece tapped the markets for 2.5 billion euros at a relatively low yield of 1.9 percent, against a guidance rate of 2.1 percent. Bids topped 12.5 billion. The takings will be used to buy back some of Greece’s debt at an improved rate, thereby making it more sustainable in the long term and reducing the need for a high primary budget surplus.

“I would like to congratulate the Public Debt Management Agency and the Ministry of Finance on the issuance of a seven-year bond at a record-low yield of 1.9 percent,” Prime Minister Kyriakos Mitsotakis wrote on Twitter.

“This is a vote of confidence in Greece’s growth prospects,” he added, commenting on the first market foray since his government took office last week.

“One of the basic conditions so that the Greek economy can revert back to normality is the systematic, good quality and low-cost financing of the country by the international markets,” Finance Minister Christos Staikouras said in a statement. “Today’s seven-year bond issue is seen as particularly successful, as it is heading in that direction,” he added.

Tuesday’s issue followed the five-year and 10-year bond issues earlier in 2019 and took the sum collected by the PDMA so far this year to 7.5 billion euros, against an annual target of 7 billion. The government intends to proceed to more issues over the remainder of 2019.

This new bond, which has a maturity date of July 23, 2026, will help bridge the gap in Greece’s yield curve and increase liquidity in the Greek bond market.