Greece to issue two new bonds by year-end, may postpone early IMF payment, officials tell Reuters

Greece plans at least two more bond issues by the end of the year and could postpone an early repayment to the International Monetary Fund to boost cash reserves and cover extra funding needs related to Covid-19, government officials told Reuters on Tuesday.

It is also shelving a decision to carry out fewer treasury bill issues this year, the sources said, speaking on condition of anonymity.

“Our plan is for at least two more bond issues by the end of the year to raise about 4 billion euros,” a senior government official said.

“The first issue might take place in the next coming months, in the summer,” the official said without giving details on the maturities of the new bonds.

Greece raised a total of 4.5 billion euros from 15- and 7- year bond issues earlier this year.

Its initial borrowing roadmap had Greece reducing annual treasury bill issues by about 5 billion to 7.5 billion euros this year. It had also pencilled in paying an early instalment of 1.7 billion euros to the IMF on loans maturing in 2021, and that is now subject to review.

“We might postpone the early repayment to the IMF, there is not a final decision yet. We will revisit the issue in September,” the official said. He did not say when Greece was planning to make the payment.

Greece repaid 2.7 billions euros of IMF loans last year, making the instalments ahead of schedule, thus reducing its total exposure to the fund to about 6 billion euros.

During its worst debt crisis in decades, which broke out in late 2009, Greece was shut out of financial markets. Unable to fund itself, it borrowed heavily from eurozone governments and the IMF. Its third international bailout expired in August 2018.

Three months ago, Athens was projecting growth of 2.8 percent for 2020 but now expects its economy to contract by between 4.7 percent to 8.9 percent, taking into account the impact of the coronavirus pandemic and the resulting shutdown in financial activity from mid-March. The country has only just started to emerge from its lockdown.

The cost of urgent fiscal measures to help businesses, workers and the unemployed is estimated to reach 12.3 billion euros by June.

“The adjustment [in borrowing strategy] focuses mainly on a change in the use of the borrowing proceeds and does not necessarily constitute a change in the overall funding activity,” a second official said.

Total t-bill issues this year will reach 12.5 billion euros, the same as in 2019.

Greece has cash reserves of 15.7 billion euros from undisbursed bailout loans and proceeds from bond issues.

[Reuters]