March 1, 2021

Greece will return to 10-year bonds, for the first time since it was rescued in 2010

Greece will return to 10-year bonds, for the first time since it was rescued in 2010


MadridUpdated:

Greece has ordered the 10-year bond issue, which will involve the first auction of debt securities to this term since 2010, when the country signed the first financial assistance program.

As reported by the Athens Stock Exchange on Monday, the Greek state has hired banks BNP Paribas, Citi, Credit Suisse, Goldman Sachs International Bank and JP Morgan, to release this issue "in the near future", in what is known like a syndicated auction.

The objective is to place an amount comparable to the 2,500 million euros of the five-year bond issued on January 29. In that auction, the first with an amortization to five years from the end of the rescue, a return of 3.60% was achieved and the demand exceeded five times the initial offer.

The success of the auction triggered a 10-year Greek bond downgrade the secondary market, from 4% at the end of January to 3.60% this morning.

Improvement of the qualification

The improvement of the sovereign debt rating by the rating agency Moody's, which raised it in two steps, from B3 to B1, also contributed to the decision of the Public Debt Management Authority (PDMA) to issue a 10-year bond.

According to leaks from banking sources to local media, Greek bonds are very attractive, because on the one hand they offer a high yield and, on the other hand, they do not pose a risk for the investor because the country is stable and does not face external threats.

Greece currently has a financial reserve of 33,000 million euros, so it does not need to resort to markets. The last issue of ten-year bonds took place on March 4, 2010, when Greece placed 5,000 million euros at an interest rate of 6.25%.

The high performance of the auction and the abrupt increase of the risk premium, which shot up from 346 basis points on 2 April 2010 at 610 at the end of that same month, the socialist Prime Minister Yorgos Papandreou was forced to ask the European Union (EU) for a financial assistance program

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