Greece Issues 30-Year Bond Confirming Full Return to Markets

Greece announced it will issue a 30-year bond on Wednesday, the longest-maturity sale since 2008, completing the country’s full return to debt markets.

Despite the impact of the pandemic on the Greek economy, the move could confirm the country’s return to normality.

The sale is a sign of just how far Greece has come over the past decade, says Bloomberg.

At the height of the euro-area debt crisis in 2012, 10-year yields skyrocketed above 44%, with the country locked out of international markets.

Now, yields are below 1%, giving the government a chance to tap long-end bonds and complete its yield curve, Bloomberg adds.

For investors, Greek bonds have already delivered. In the past year alone, they have returned around 18%, making them the best performers in the region, according to Bloomberg Barclays Indices.

The issue of a long-maturity bond has long been on the table at the Finance Ministry and the Public Debt Management Agency (PDMA), with the primary dealers recommending such a move since December, Greek daily Kathimerini says.

The PDMA’s argument has been that an issue not due to mature for 30 years would have to be prepared with caution so as not to put investor trust at risk.

Therefore after three months of careful planning, with the PDMA weighing conditions in the bond markets, the mood of investors and the recommendations of the lead managers, the decision has been made.

An important signal came last week in the form of the European Central Bank announcement about significantly increasing the pace of bond purchases.

The amount to be raised has not yet been set and will be adjusted to investor demand.

An amount close to 2-2.5 billion euros would in any case allow for the reopening of the issue later in the year.

Greek economy in better shape than feared

The Greek economy is in a better shape than had been feared, according to official data released earlier in March.

The Hellenic Statistical Authority announced better-than-expected GDP figures for 2020, with the country’s Gross Domestic Product contracting by 8.2% to 168.5 billion euros from 183.6 billion in 2019.

This compares with the government’s estimate for a 10.5% contraction, included in the 2021 budget, and the latest European Commission forecast for a 10% drop.

That figure is still worse than the eurozone average of -6.8% and the European Union average of -6.4%. However, it is better than Italy’s -8.8% and Spain’s -11.2%.

The Hellenic Statistical Authority said that Greek GDP shrank by 7.9% in the fourth quarter compared with the same period in 2019, but rose 2.7% in comparison with the third quarter of 2020.