Greece Raises $3.4 Billion From 10-Year Bond Issue

Bond sale Greece
There is tight demand for the new 10-year bond issued by Greece. Credit: Greek Reporter

Greece raised 3.0 billion euros ($3.4 billion) at an interest rate of 1.8 percent from the new 10-year bond issue on Wednesday.

Finance Minister Christos Staikouras said the country’s first bond issue of the year was a success as it attracted “high demand and a high quality of investors.”

He said the big increase in yield compared to June 2021 is attributed to the international rise in government borrowing expenses.

Grecian Delight supports Greece

At that time, Greece received its strongest-ever demand for a bond sale, cementing its place as one of Europe’s most sought-after borrowers. Greece drummed up 30 billion euros of offers for its 2.5 billion-euro ($3.1 billion) sale of bonds due in 2031.

The interest rate of the issue was “particularly satisfactory taking in mind conditions prevailing in international markets,” Staikouras said.

“Despite this difficult situation, Greece borrowed at a cost less than half of a similar issue in March 2019, when the interest rate was set at 3.9 percent, while the spread between the Greek and German benchmark bonds has shrunk significantly, both in comparison with the pre-pandemic levels and with the levels prevailing in early 2019,” he added.

The Public Debt Management Agency on Tuesday requested that six banks (Barclays, Commerzbank, Eurobank, Morgan Stanley, Nomura and Societe Generale) be the book runners of the issue.

Greece’s Public Debt Management Authority plans to issue new bonds worth at least 12 billion euros this year, down from 14 billion in 2021, in a move aimed to highlight that Greece is able to borrow at competitive terms.

Greece’s bond sale “reflects the increase in yields across Europe”

“The higher cost reflects the increase in yields across Europe,” Kostas Boukas, head of asset management at Beta Securities in Athens, told Reuters, adding “The environment is different than last year as a result of higher inflation and policy change from central banks.”

The bond sale is the country’s first this year and follows a revision of the country’s BB credit rating outlook to positive last Friday by Fitch Ratings.

Last week, the credit ratings company Fitch bumped Greece’s credit outlook from stable to positive. The country’s rating remains at BB, which is two ranks below investment grade.

Fitch estimated in its new report that Greece’s economy grew 8.3 percent in 2021, almost double the 4.3 percent forecast the company had given it in July.

Eurostat reported last month that Greece had the largest gross domestic product (GDP) growth rate in the third quarter of 2021 in the entire Eurozone.

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