D-day for bond mar­ket re­turn

Athens takes very cau­tious steps, an­nounc­ing 5-year is­sue with­out spec­i­fy­ing tar­geted amount or yield

Kathimerini English - - Focus - VAS­SILIS ZIRAS

To­day marks Greece’s first at­tempt since 2014 to tap in­ter­na­tional mar­kets with the is­sue of a five-year bond. The an­nounce­ment of the book open­ing was made yes­ter­day in a state­ment via the Athens stock mar­ket.

Greece is re­turn­ing to the mar­kets in a very cau­tious man­ner, as the of­fi­cial an­nounce­ment by the Hel­lenic Repub­lic men­tions nei­ther the amount nor the in­ter­est rate of the is­sue.

The process will be com­pleted over the course of the day and will have three main pil­lars: a swap of bonds ma­tur­ing on April 17, 2019 for the new five-year pa­per, the re­turn of bonds ex­pir­ing in 2019 through pay­ing 102.6 cents per euro, and the sale of new bonds through cash.

In a con­fer­ence call with bond man­agers in Greece and abroad Fi­nance Min­is­ter Eu­clid Tsakalo­tos said that “the tough mea­sures are now in place, we have the growth ahead of us.” Tsakalo­tos added that the Euro- pean Cen­tral Bank might in­clude the Greek bonds in its quan­ti­ta­tive eas­ing (QE) pro­gram in Oc­to­ber, which he said would help the Greek econ­omy.

The prime min­is­ter’s of­fice said in a state­ment that the is­sue is aimed at man­ag­ing and re­duc­ing fu­ture bor­row­ing needs and mak­ing the new bond a ref­er­ence point for Greek pa­per.

The de­ci­sion to re­turn to the mar­kets was based on a se­ries of fa­vor- able de­vel­op­ments for Greece: the Eurogroup de­ci­sion on June 15 that closed the sec­ond bailout re­view, the up­grad­ing of the coun­try’s credit rat­ing by Moody’s to Caa2 on June 23, the emer­gence of the coun­try from the ex­ces­sive deficit pro­ce­dure on July 12, the agree­ment in prin­ci­ple with the In­ter­na­tional Mon­e­tary Fund for its in­volve­ment in the Greek pro­gram last Thursday, and the up­grad­ing of Greece’s out­look to pos­i­tive by Stan­dard & Poor’s last Friday. 1.1648

Greece has com­mis­sioned six banks from both sides of the At­lantic to man­age the bond is­sue: They are BNP Paribas, Cit­i­group Global Mar­kets Limited, Deutsche Bank AG, Gold­man Sachs In­ter­na­tional Bank, HSBC Bank Plc and Merrill Lynch In­ter­na­tional.

The mar­kets re­acted fa­vor­ably yes­ter­day, as the price of the two-year bond ral­lied to 102.60 cents and the yield slid to 3.20 per­cent.

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