Greece tries first 30-year debt sale since 2008

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

The nation is selling 30-year bonds via banks, which could be an opportunity for investors to pick up yields that are likely to be the highest in the euro area. Greece is following others in the region in seizing on low borrowing costs to finance its pandemic recovery.

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.

For investors, Greek bonds have already delivered. In the past year alone, they have returned around 18%, 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.

Greek Bonds Emerge From the Fire of 2011 Stronger Than Ever

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.

Good Test

That means the upcoming 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.

BNP Paribas SA, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co. and the National Bank of Greece SA were appointed as joint lead managers for the sale of the bonds maturing in 2052.

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

Source: Bloomberg