Greece Receives Record Demand for its Bond Sale

Greece received its strongest-ever demand for a bond sale and cemented its place as one of Europe’s most sought-after borrowers, according to Bloomberg on Wednesday.

Greece drummed up 30 billion euros of offers for its 2.5 billion-euro ($3.1 billion) sale of bonds due in 2031.

The Minister for Finance, Christos Staikouras said that the bond sale “confirms that the country is gaining the confidence of the international investors community and is, gradually, returning to normalcy.

“Sacrifices made by the society, the effectiveness of the Government’s policy, the consistent and systematic work of the Public Debt Management Agency and the Ministry of Finance as a whole, result in positive outcomes for the economy, the society and country,” he added.

"Τoday, Greece raised 2.5 bn euros, through a reopening of the recent 10-year bond issuance, at a reoffer yield of approximately 0.90%.
The demand for this issuance was exceptionally high and the investors’ quality was excellent.
Furthermore, the spread between the 10-year Greek pic.twitter.com/60Xtu7JTp0

— Christos Staikouras (@cstaikouras) June 9, 2021

The demand, in excess of 11 times the amount on sale, topped the previous record set in January this year by one billion euros.

Greek 10-year bond yields fell four basis points to 0.81% Wednesday. Last week, the risk premium of Greece’s 10-year bonds over equivalent German securities — the region’s paragon of safety — briefly dropped below 100 basis points last week for the first time since 2008.

BNP Paribas, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan and Nomura are the underwriters of the syndicated issue.

Greece has raised 8.5 billion euros through bond issues so far this year (3.5 billion with 10-year bonds, 2.5 billion with five-year bonds and 2.5 billion with 30-year bonds.

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.

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

It also maintained a “positive” outlook. 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 a 4.2% growth. The recovery will accelerate to 5.8% in 2022, the agency said.

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.