Greece starts taking bond orders in return from market exile

LONDON: Greece has fired the starting gun on its first issue of new bonds since 2014, testing whether investors will back its recovery from a debt crisis that forced it to seek multiple international bailouts.

The sub-investment grade rated country is seeking to sell five-year debt yielding about 4.75%, according to a person familiar with the transaction who is not authorised to speak publicly and asked not to be named.

A final price will be announced later, the person said.

The guidance “looks very attractive,” said Lutz Roehmeyer, who helps oversee 12 billion euros at Landesbank Berlin Investment GmbH including Greek debt.

“Expectations were at 4.5%, so the chance of success is very high.”

The deal follows a new conditional bailout agreed last week with the International Monetary Fund (IMF) involving a loan worth as much as 1.6 billion euros (US$1.86bil), contingent on euro-zone countries providing some debt relief.

It also comes after the successful conclusion of the second European Union-backed bailout review and the disbursement of the first part of the 8.5 billion-euro tranche by the European Stability Mechanism on July 10.

The offering of new bonds yesterday comes alongside a call to holders of existing 4.75% notes maturing in 2019 to tender them for cash and, if successful, will partially extend Greece’s maturity profile.

The bond sale was delayed from last week partly on account of a ceiling set by the IMF on how much debt the country can hold.

A technical solution was found since then, allowing some scope for issuance of new debt, a person familiar with the matter said on Monday, asking not to be named as the topic is sensitive.

The IMF declined to comment.

BNP Paribas SA, Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc and HSBC Holdings Plc are arranging the sale.