Mon, December 06, 2021


Greece tries first 30-year debt sale since 2008 financial crisis

Greece is issuing its longest-maturity bonds since 2008, completing the country's full return to debt markets.

The nation drew in more than 17 billion euros ($20.3 billion) of orders for its sale of 30-year bonds via banks, showing investors' long-term confidence and appetite for yields that are likely to be the highest in the euro area. The demand allowed the country to trim its pricing guidance by as much as 10 basis points from initial levels.

The sale is a sign of just how far Greece has come over the past decade. At the height of the euro-area debt crisis in 2012, 10-year yields skyrocketed above 44%, with the country locked out of international markets. Now, yields are below 1%, giving the government a chance to tap long-end bonds and complete its yield curve.

"This Greek bond sale marks the nation's rehabilitation," said Alexandros Malamas, a trader at Piraeus Securities in Athens.

The extra supply saw Greek debt leading regional losses on Wednesday, with 10-year yields climbing five basis points to 0.92%, However, for investors the country's bonds have already delivered. In the past year alone, they have returned around 25%, making them the best performers in the region, according to Bloomberg Barclays Indices.

Greece currently has a cash buffer of 30 billion euros ($35.7 billion), which means that it's not in an immediate rush to raise short-term funds. Still, the government wants to boost its coffers as the economic fallout from the pandemic is larger than expected. It already plans to fund measures worth 11.6 billion euros, some 4 billion euros more than initially planned.

For Mediolanum fund manager Charles Diebel, the sale means Greece is now "back in the game." He was put off from buying Greek bonds after staying in Athens during the euro-area crisis in the same hotel as representatives of the institutions that imposed stringent austerity on Greece in return for bailouts.

Trading in Greek bonds remains scant. Bank of Greece data show turnover on the electronic secondary securities market, or HDAT, totaled 2.6 billion euros last month, compared with a peak of 136 billion euros in September 2004.

That means the syndication is also a rare chance for investors to get their hands on Greek assets, particularly with the European Central Bank propping up the market through bond buying. A sale of 10-year debt earlier this year drew record orders of 29 billion euros.

BNP Paribas, Goldman Sachs, HSBC Holdings, JPMorgan Chase and the National Bank of Greece ere appointed as joint lead managers for the sale of the bonds maturing in 2052. Price guidance was tightened to between 150 basis points to 155 basis points above midswaps, from the 160 originally provided.

"It completes their return," said Jan von Gerich, chief strategist at Nordea Bank. "It will be really interesting because of the long maturity and a good test of the underlying bond market sentiment for risk."

Published : March 18, 2021

By : Syndication Washington Post, Bloomberg · John Ainger, James Hirai