PDMA about to reopen 10-year issue

Greece’s 10-year bond that was issued last March is to be reopened next week in a bid to enhance the liquidity of the bond market after the rapid decline in Greek debt yields to historic lows.

A meeting on Thursday between officials of the Finance Ministry and the Public Debt Management Agency led to the decision for the Greek state to make that move to raise 1-2 billion euros and capitalize on the currently favorable climate for Greece and the very positive prospects in the international bond market. This is despite having covered the borrowing program for 2019 with the year’s first three issues, the last having been the seven-year paper in July.

The monetary policy of the European Central Bank with the start of its new bond-buying program (QE) in November, the increasingly negative deposit rates and fears about the global economy are factors that analysts say will maintain strong interest in bonds by investors, especially for bonds with rather high yields.

Despite their plunge and the return of the spread with the German bunds to pre-crisis levels (at 195 basis points), Greek bond yields remain the highest in the eurozone. This, combined with the fact that investors consider Greece the “most optimistic investment narrative” and the greatest recovery story, as recent roadshows in London and New York have shown, is expected to contribute to a strong appetite for Greek bonds, analysts say.

The 10-year bond was issued on March 5 and had a 3.9 percent interest rate. It is mostly owned by Greek banks, which means it has little liquidity. Sources are now saying that the interest rate and the opening price of the issue will be those formed by the market that day. Yesterday the 10-year bond yield amounted to 1.35 percent and its price stood at 122.30.

The increase of the issue by 1-2 billion euros would not only improve its liquidity, but would also attract more high-quality investors, thereby improving the country’s investment base. The PDMA was particularly encouraged by the participation of major foreign funds at the recent roadshow by Hellenic Exchanges in London, showing that Greece is back on the radar of real money investors.