Greece starts sale of first bond since ECB eligibility

Greece began the sale of a new seven-year bond on Wednesday, its first issuance since its debt became eligible for European Central Bank purchases.

Initial price guidance on the bond was set at 230 basis points over the mid-swap level, according to a lead manager note seen by Reuters. The bond is expected to price later on Wednesday.

The bond will be Greece’s first issuance since its debt became eligible for European Central Bank purchases under the Pandemic Emergency Purchase Program last month, despite its junk ratings, which make it ineligible for the ECB’s usual bond-buying program.

The bonds are being sold to help shield the Greek economy from the impact of the coronavirus pandemic. The proceeds will bolster the state coffers, Finance Minister Christos Staikouras said on Tuesday.

Greek 10-year government bond yields rose 18 basis points to 2.06 percent, a near three-week high. A borrower’s existing bond yields usually rise before a sale as investors make room for the new supply.

After issuing its first 15-year bond since the financial crisis in January, Greece has opted for the seven-year tenor, as have many other euro zone sovereigns who sold bonds to fund additional borrowing in the face of the coronavirus pandemic.

Citi, Commerzbank, Credit Suisse, Morgan Stanley, Nomura and Societe Generale have been appointed joint lead managers for the bond issue, maturing in April 2027. Greece last issued a seven-year bond in July 2019.

 [Reuters]