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Greece Announces Return to Capital Markets

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Bank of Greece. Credit: Greek Reporter

On Tuesday, Greece announced its return to international capital markets and mandated six banks to run a reissue process for a 7-year bond maturing in April 2027.

The 7-year bond issue carries a coupon of 2 percent and yields 2.013 percent.

The Public Debt Management Agency mandated BNP Paribas, BofA Securities, Citi, Deutsche Bank, Goldman Sachs Bank Europe SE, and JP Morgan for the issue.

Greece’s return to capital markets follows an upgrade by Standard & Poor’s

The decision to return to capital markets follows Friday’s upgrade by Standard & Poor’s of Greece’s credit rating by one notch to BB+ with a stable outlook from BB with positive outlook. This rating is only one notch away from investment grade.

“The upgrade reflects our expectation of a continuous improvement in Greece’s policy effectiveness, while the fallout from the war in Ukraine appears manageable in light of considerable buffers in both the private and public sectors,” the agency said in a statement.

S&P put its outlook for the country at stable, citing “our expectation that Greece’s fiscal buffers and proven policy effectiveness will allow the country to absorb the indirect impact of the war in Ukraine on its economy and public finances.”

Greek PM Kyriakos Mitsotakis hailed the decision by S&P Global Ratings saying that the upgrade after two years of pandemic and in the middle of war “confirms the confidence in the Greek economy.”

In a tweet, Mitsotakis added: “We are just a step away from the coveted investment level, a seal of credibility that will upgrade the investment and development prospects of our country. We continue steadily with the same seriousness, dedication and hard work towards the finishing line!”

Growth in the Greek economy will decelerate

S&P Global Ratings added, however, that the growth in the Greek economy will decelerate in 2022 due to the war in Ukraine.

“Russia’s invasion of its neighbor is the key driver of our projection that Greek GDP growth will decelerate to 3.4 percent in 2022 from 8.3 percent last year,” the agency said, “despite low direct export exposure to Russia, significant household savings buffers” and Athens’ moves to purchase natural gas from other countries.

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