Greece is selling 15-year euro bonds for the first time since 2009, a sign the country is gradually returning to normality after suffering a debt crisis. Price guidance for the offering is about 170 basis points over similar maturity midswaps, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak about it. That puts pricing at just under 2%.
The sale was announced on Monday when yields on 10-year notes hit a record low following Fitch Rating’s decision to raise the country’s sovereign grade. The last offering of this tenor was concluded less than a year before the nation received a bailout, closing Greece off from international markets. It raised €7bn at the time at 5.39%.
“It makes sense for these Treasuries to fund now,” said Peter McCallum, a rates strategist at Mizuho International Plc in London. “Greece can add a longer maturity point to their curve after the 5-year and 10-year last year, which should be well sought after,” he added, expecting around €2bn ($2.2bn) to be sold.
With the new sale the Greek government wants to send a clear message that investors trust the country’s long-term debt sustainability. In 2018, just before the end of Greece’s third bailout program, the euro-area decided a pack of further debt relief measures that secures a smooth debt payment path until 2032.
A successful sale of bonds that mature in 2035 will signal that investors don’t fear that Greece won’t repay them once the European safety net expires. It will also help the Prime Minister, Kyriakos Mitsotakis, to argue that Greek debt is sustainable so that he can ask his European partners for more fiscal space by lowering already agreed primary surplus targets for 2021 onwards.
Greek bonds were the best performers in Europe last year as investors sought their relatively high returns given much euro-area debt turned negative yielding. Benchmark 10-year yields were steady at 1.18% Tuesday, having touched a record 1.155% Monday.
The government hired Barclays Bank Plc, BNP Paribas SA, BofA Securities, Goldman Sachs Group, HSBC Holdings Plc, JP Morgan Chase & Co as joint lead managers on the sale.
“I think the Greek deal started slightly tighter than what I was expecting,” said Antoine Bouvet, a rates strategist at ING Groep NV. “Tighter pricing and order books point in the same direction: greater demand than in recent deals, despite the higher duration.”
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