LONDON/ATHENS: Greece, at risk of crashing out of the eurozone just two years ago, will issue its first sovereign bond in almost four years today, seeking to send a strong political and economic signal it is on the way out of its debt crisis.
International banks have been mandated to sell a benchmark five-year, euro-denominated bond under British law, with the sale to be completed “in the immediate future,” the country’s finance ministry said in a statement.
According to sources, pricing is set for today. Greece initially priced the sale at a yield of between 5 and 5.25 percent and has already attracted more than €11bn of investor interest.
“We aim to raise up to €2.5bn,” one Greek government official said. “It will be a great success if the coupon is below 5.3 percent.”
The sale is an important milestone for one of Europe’s most troubled economies. The last time it sold bonds, as opposed to very short-term paper, was back in March 2010. Greece has been kept afloat since by €218bn of European Union/International Monetary Fund bailout money and about €15bn of treasury bills.
Athens has no pressing funding needs but wants to test the waters for more and bigger bond sales in the future, as part of its strategy to cover all its funding needs from the market by 2016.
Bailout payments from the EU expire later this year and Greece has said it needs no further bailout to stay afloat. The IMF welcomed the news, saying it proved the country’s tough austerity policies, which have helped eliminate its underlying budget deficit, were working. “This is an important milestone and clearly speaks to the success of the (bailout) programme,” the head of the IMF’s Greek mission, Poul Thomsen, told reporters.
The sovereign has hired Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs International, HSBC, JP Morgan and Morgan Stanley to arrange the deal.
Athens originally planned to tap bond markets in the second half of the year, after more tangible evidence that its ongoing, six-year recession is over.
But rapidly falling bond yields and pressure to produce an economic success before the European Parliament elections in May have persuaded Prime Minister Antonis Samaras and his fragile coalition government to bring the sale forward.
In a dramatic turnaround, existing Greek 10-year bond yields dropped below 6 percent for the first time in four years yesterday, down from about 40 percent two years ago when Athens imposed severe losses on private bondholders in a €130bn restructuring
International investors signalled they were keen to buy Greek debt as early as Tuesday, when foreigners snapped up about 80 percent of a €1.3bn six-month T-bill issue. Reuters
