Greece Raises $3.6 Billion from Five-Year Bond Issue

Greece has raised approximately 3 billion euros ($3.6 billion) after the completion of a five-year bond issue on Wednesday.

Greek Finance Minister Christos Staikouras welcomed the successful raising of the funds, which came at an almost zero interest rate, setting a new all-time low in the borrowing cost of the Greek state regardless of maturity.

The issue was more than 8 times oversubscribed, with bids exceeding 20 billion euros.

In the statement, Staikouras noted that “since July of 2019, when New Democracy took over power, Greece has drained 25 billion euros from capital markets at very favorable terms,” adding that this way the government guaranteed that the country’s cash reserves remained at a safe level.

“Today’s vote of confidence by the international investment community adds to a series of recent positive economic developments, such as the country’s credit rating upgrade, rising industrial production, a higher manufacturing production index and the improvement of the economic sentiment index.”

Staikouras also underlined that a treasury note auction on Wednesday resulted in an all-time low interest rate of -0.4 percent and said that “all these are a recognition of the sacrifices made by Greek society, and the credibility and efficiency of the government policy.”

Barclays, BofA Securities, Citi, Commerzbank, Morgan Stanley and Societe Generale were appointed to jointly manage the issue, due in February, 2026.

Bond issue shows confidence in Greek economy

International capital markets are offering a new vote of confidence in the Greek economy,  sources at the Ministry of Finance noted.

In April, the Bank of Greece reiterated its 4.2% growth forecast for 2021, but warned that the Greek economy is facing a large number of bankruptcies of unsustainable enterprises after the year-long coronavirus crisis.

Bank of Greece Governor Yannis Stournaras was relatively optimistic for 2021 in his annual report for 2020, sticking to its forecast for an economic expansion of 4.2%, which is higher than that of the government and the European Commission, pegged at 3.5%.

However, he cautioned that this involves a great deal of uncertainty due to the risks associated with the course of the pandemic as well as the special features of the Greek economy.

S&P upgrades Greece’s credit rating

Also in April, S&P Global Ratings, the American credit rating agency, upgraded Greece’s sovereign credit rating by one notch to “BB” from “BB-“.

It also maintained a “positive” outlook for the country.

In its scheduled review of the Greek economy, the US firm projected an economic rebound of 4.9% for this year, above the latest Bank of Greece forecast for 4.2% growth. The recovery will accelerate to 5.8% in 2022, the agency said on Friday.

The fact that S&P has also adjusted Greece’s outlook to “positive” from stable means that a further upgrade may well be due in the next 12 to 18 months, taking Greece to the verge of investment grade after more than a decade.