The Greek state is planning to cover more than half of its borrowing needs for 2024 by issuing bonds worth ten billion euros, the Public Debt Management Agency (PDMA) announced on Friday.
The Agency estimated the country’s total borrowing needs for the new year at 18.9 billion euros.
Besides the ten billion euros which will be covered by the new bonds’ issuance, another 4.1 billion euros will come from sources such as the European Investment Bank, 1.6 billion euros from the selling of shares and other state assets, and 3.6 billion euros from the state’s liquid assets.
PDMA estimated the cash buffer available to the state at thirty billion euros.
New bonds serve Greece’s funding strategy and borrowing needs
The funding strategy for year 2024 aims at further improving the Greek Government Bonds’ secondary market operation and further reducing the rollover risk, PDMA’s report points out.
Hence, the strategy “will focus on the continuous presence in the international debt markets, accompanied by the reduction in the level of public debt, proactive management of the debt portfolio and the preservation of a significant cash buffer.”
The Greek state’s 18.9 billion euros in borrowing needs for the year 2024 include 5.463 billion euros for refinancing maturing bonds; 4.8 billion for the repayment of interest and other individual liabilities; 12 billion for the definitive redemption of promissory notes; and 3.589 billion for liquidity needs at specific time periods in 2024.
An additional of 6.9 billion is not included in the total of needs due to the estimates for primary surplus.
Greek economy’s advancement
Greece’s credit rating was upgraded to investment grade by five rating agencies (R&I, Scope, DBRS, S&P and Fitch) between July 31, 2023 and December 1, 2023. Its rating by Moody’s remained only one notch below investment grade, following a two-notch upgrade in September, PDMA explains.
Greek government bonds have strongly outperformed the euro area average, the agency adds, and Greece is expected to continue outperforming the euro area average in the coming years.
The country is the top recipient of NGEU funds, amounting to €30.2 billion in the period
2021 to 2026, which will facilitate the move towards a sustainable growth model, “providing substantial, frontloaded funding and lowering fiscal risks.”
At the moment, Greece’s cash reserves amount to thirty billion euros, including general government entities’ deposits in commercial banks.
These cash reserves were progressively accumulated over the past years thanks
to new state bond issuances over 2017 to 2023. Fiscal surpluses accumulated prior to the pandemic, as well as in 2023 with a “very favorable” debt amortization profile.
The amount could cover around three years of gross financing needs, while it also constitutes a significant buffer against any refinancing and interest rate risks over the medium-term.