Latest Greek foray into markets on Tues. with 5-year issue

The latest “foray” by the Greek state into the markets, expected on Tuesday, will be among the “priciest” of very recent memory, with the yield on the Hellenic Republic’s five-year bond hovering at 4.2 percent on Monday – the highest since 2017.

According to a press release by the semi-independent Public Debt Management Agency (PDMA), the Greek state aims to drain 750 million euros from an auction for the re-opening of the GGB three-month Euribor +1.23 percent per annum, with a maturity date on Dec.  15, 2027.

The amount to be auctioned is 750 million euros and settlement date is November 2, 2022 (T+5).

Estimates on Monday based on the Eurobor yield, show that Greece will borrow the next day with an interest rate in the 3-percent “territory”.

While judged as risky, given rising costs for sovereign borrowing for practically every country at the moment, the Greek state is making a bold statement in reaching out to markets, one punctuated by an adjustable rate.

The last time the Greek state floated a five-year bond was in September 2021, when the first issue was accompanied by a 30-year bond issue.

Both issues were met with high interest by investors at the time, with the former completed with an almost zero yield, a historic low – and landmark – for Greek debt.

In terms of “political considerations”, the Mitsotakis government – now less than a year before scheduled general elections – also wants to send a “message” to the markets in the last quarter of 2024, namely, that Greece is an active sovereign borrower despite the difficult global situation and despite the fact that 36-billion-euro “cushion” remains mostly intact.