Greece Bond Issue Talk Resurfaces in Post-election Glow

Greece might issue new debt at lower borrowing cost to pay back IMF loans

Source: Financial Post

Greece’s debt agency could take advantage of a post-election boost to issue new debt at record low borrowing costs in the coming weeks to repay an expensive International Monetary Fund loan, sources told Reuters on Monday.

Two bankers working for Greece’s primary dealers — banks appointed by debt agencies to help manage their debt — said the country could bring a long-expected bond as early as this week.

A Treasury source said, meanwhile, that Greece wants to issue a new bond in coming weeks taking advantage of the low yields, but will not proceed until the new government gives the final green light.

“The Greek debt agency are very keen and we’ve been hearing it could happen as early as this week,” said one of the bankers.

“But this isn’t a KfW or an EIB,” he added, referring to two frequent government-linked bond issuers.

“It could take a bit longer, getting the approvals from the new government and so on.”

Former deputy finance minister George Chouliarakis told Reuters last week that if re-elected, the Syriza government would have looked to conclude a plan for early repayment of about 40% of a total 9.5 billion euros owed to the IMF by September, avoiding high interest rates of 5.1-5.2%.

On bond markets, Greek 10-year borrowing costs have dropped as low as 2.01%. Yields were at 4.4% at the start of 2019.

Greece’s government debt has been one of the best performing this year on the promise of more stimulus from the European Central Bank and investor confidence in Greece’s own recovery and future within the euro zone.

This rally was given fresh legs by this weekend’s snap election that saw Greece’s opposition conservatives return to power, sparking hopes of a renewed focus on strengthening the country’s economic recovery.

The bankers said Greece was more likely to issue short-term debt, with its five-year yields hovering at around 1.15%; a third of where it was at the start of the year.