Lowest ever bond interest rate

Benchmark 10-year debt re-issue fetches 2.5 bln euros at a record low yield of just 1.22%

Greece’s cash reserves received a 2.5-billion-euro boost yesterday after the re-issue of June’s benchmark 10-year bond that collected bids in excess of €18 billion from a large share of “great-quality” investors.

Given the country’s increased cash needs, the Public Debt Management Agency made the most of the favorable market conditions to act ahead of the expected wave of debt issues by fellow eurozone states and the possible volatility the publication of provisional second-quarter gross domestic product data may generate today.

Such was the demand from the first hour of the books reopening that bids added up to €12.5 billion.

The books eventually closed with demand of over €18 billion, including €1.02 billion from the joint lead managers (the banks that ran the issue), and the interest rate at 1.22%, significantly lower than the original guidance of 1.33%, let alone the 1.5% coupon when the bond was first issued in June.

This is a historically low rate for a Greek 10-year issue, and takes the volume of this benchmark bond to €5.5 billion, after the €3 billion originally raised in June through the bond maturing in June 2030. It also takes the sum of the cash drawn from the bond markets this year to €10 billion after four forays, three of them during the pandemic.

“For the third time after the outbreak of the coronavirus pandemic, the international investment community has affirmed its confidence in the Greek economy,” rejoiced Finance Minister Christos Staikouras.

“The country borrowed at the lowest cost ever in a Greek state bond issue, at a rate close to 1.2%.

It is also very important that demand was high and of great quality. The issue was mostly covered by foreign portfolios and institutional investors. For these reasons I warmly congratulate the PDMA, for its methodical and serious work,” Staikouras added.

The country’s cash reserves have now risen above €37 billion, almost matching the level before the outbreak of the health crisis in March.