Greece may issue another new bond next month

Athens: Greece’s next market foray with a new bond is possible as early as next month, according to estimates.

After the new 10-year bond in January raised 4 billion euros, plus around €1 billion raised in bond reissue auctions, the Public Debt Management Agency (PDMA) plans to raise around €3 billion further in new auctions by the end of year (one reopening every month except August and December), with €2 billion (at least) remaining to be raised through the issuance of a new bond.

PDMA’s target is to raise up to €10 billion this year from the markets, while €5.15 billion have already been raised, meaning that 51.15% of the year’s publishing activity has been covered before the end of the first quarter.

French bank Societe Generale estimates that a new 5-year bond will be issued in April, but it is certain that it will be issued by June, before the European Central Bank rate cuts begin, and the volatile factor of the US presidential election in November weighs in over the year’s second half.

The PDMA aim is to continue the “project” of optimizing the Greek bond market, focusing more on enhancing liquidity in the secondary market through reissues, rather than on movements in the primary market with new bond issues.

As becomes clear, a key element of the issuing activity this year is the re-issuance of existing bonds, with PDMA having started a steady reopening program for about a year. The reason is that the new investors, whom the investment grade brings in, want to see a market that looks like normal. In such a market, the “rule” is that the size of the “benchmark” bonds is at least €5 billion.

PDMA, looking at which securities are in demand, proceeds to open up their issues, thereby increasing their size and liquidity and shaping their pricing to more reasonable levels.

For example, the 5-year issued in April 2023 with an initial size of €2.5 billion , after the reissues that have been made has increased to €3.85 billion . Another popular bond is the 10-year bond issued in 2023, amounting to €3.5 billion. After the reopenings, it has increased to €4.9 billion, therefore reaching the size of a normal investment-grade-country bond.

As Dimitris Tsakonas, the general director of PDMA, has stated, “the most difficult task we have to face is how to provide a supply of securities and how to improve liquidity in the secondary market if we take into account the fact that Greece’s gross financing needs will be very small for a long time.”
For the next 50 years, on average, Greece’s gross borrowing needs will amount to 5.8% of its gross domestic product.