LAST UPDATE: 15:00
Of Eleftheria Kourtali
The book of offers for the new 10-year bond of the Greek State was closed, with the first exit of Greece for 2022 being successful and the demand quite strong, given the conditions in the markets. The strong sell-off in US bonds, with the yield of the 10-year treasury climbing to a two-year high and exceeding 1.8%, swept all government securities internationally, with the yield of the German bund “returning” today to positive for the first time in almost three years.
The initial interest rate of the new Greek bond was formed at 145 basis points plus the mid swap, ie at 1.89%, while then it fell to 140 basis points plus the mid swap, ie at 1.83% where it is estimated that it is formed at closing, with official announcements expected later in the day. Market estimates had set the final interest rate close to 1.80%.
Although the pumping amount was not set as required by demand, market sources say ODDIH is raising 3 billion euros. In the first minutes after the opening of the book, bids amounting to 5 billion euros were collected, while shortly after 12:00 Greek time, they exceeded 11 billion euros and at the closing of the book, they reached 15 billion euros.
What is certain, of course, that the financial staff knows, is that 2022 is a year of higher yields on bonds in general, due to the change in monetary policy, but also the rise in inflation, so the conditions and the interest rate can in no case to compare with those of last year.
After all, this has become apparent in the publications of other countries in recent days, with Italy, Spain and Portugal paying a higher premium in their new titles.
The issue was run by Barclays, Commerzbank, Eurobank, Morgan Stanley, Nomura and Société Générale, while the new Greek 10-year title expires in June 2032.
It is noted that the 10-year bond issued in 2021 – lasting about 9.5 years today, as it expires in June 2031 – has a spread of 160 bp and a yield of 1.62%, while it was issued with a historically low interest rate of 0.807% (at 0.888% the yield during the re-opening of June), with a spread of 135 bp and with a coupon of 0.75%. Greek yields were not particularly affected by the sell-off, with Greece’s current output having been widely valued by the market.
Historically low yields are now a thing of the past, but the goal for the financial staff continues to be the interest rate, but also the quality of the investors. The interest rate essentially reflects where the market places the risk of Greece, at a time when the launch of Omicron is pressing the fiscal countries, the supply of securities in the eurozone continues to be high and the debate on the new fiscal framework has “heated up”.
However, Greece shows the most attractive returns in the euro area, while it continues to be protected from the ECB’s net, more until March, where it continues to run PEPP and at a reduced pace thereafter, as it will participate in its flexible reinvestment program. ΕΚΤ.
In addition, the country maintains high cash resources (well over 30 billion euros), which ensure the financing needs, has strong prospects due to the continuation of reforms, but also the resources of the Recovery Fund, while it is on an upward trajectory of ratings by houses – something that was confirmed by Fitch’s upgrade on Friday, which “raised” the country’s outlook to a positive one – with the gap up to the investment level being an opportunity for investors to build positions in Greek bonds.
All the above indicate that the demand for today, but also for the other issues of the Greek State for the current year, will be strong.
As for the rest of the ODDIH loan program, it is expected to be forward-looking, with most of it taking place in the first half of the year, while, as announced, the goal is to raise a total of 12 billion euros this year, part of which will come and from the first Greek green government bond, which is scheduled for autumn.
The main goal of ODDIH and the financial staff remains the realization of moves which will “convince” the rating agencies to “raise” Greece to the investment level.
Ensuring the continuous publishing presence of the Greek State in the international markets in combination with the utilization of the opportunities provided by the country’s participation in PEPP, the further provision of high liquidity issues and the further reduction of the spreads, are “fixed” goals of ODDIH and for 2022.
The focus is also on repayments, ie the repayment of part of the loans received by the country, which further reduces the risk of refinancing. These include the full repayment of loans to the IMF and the double early repayment of part of the loans of the first memorandum (GLF), which are placed within the first quarter.
Source From: Capital