U.S. Markets close in 4 hrs 58 mins

Greece Sells 15-Year Debt for First Time in More Than Decade

Sotiris Nikas and James Hirai

(Bloomberg) -- Greece sold its first 15-year euro bonds since 2009 at near record low costs, a sign the country is gradually returning to normality after suffering a debt crisis.

The country borrowed 2.5 billion euros ($2.75 billion) on Tuesday with a cost of 165 basis points over similar maturity midswaps, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. Pricing was at just under 1.9%. Offers closed above 18.8 billion euros, close to the record of 20 billion euros in a 2014 sale of five-year debt.

The latest sale was announced on Monday when yields on 10-year notes hit a record low following Fitch Rating’s decision to raise the country’s sovereign grade. The last offering of this tenor was concluded less than a year before the nation received a bailout, closing Greece off from international markets. It raised 7 billion euros at the time at 5.39%.

“It makes sense for these Treasuries to fund now,” said Peter McCallum, a rates strategist at Mizuho International Plc in London. “Greece can add a longer maturity point to their curve after the 5-year and 10-year last year, which should be well sought after,” he added.

With the new sale the Greek government wants to send a clear message that investors trust the country’s long-term debt sustainability. In 2018, just before the end of Greece’s third bailout program, the euro-area decided a pack of further debt relief measures that secures a smooth debt payment path until 2032.

A successful sale of bonds that mature in 2035 will signal that investors don’t fear that Greece won’t repay them once the European safety net expires. It will also help the Prime Minister, Kyriakos Mitsotakis, to argue that Greek debt is sustainable so that he can ask his European partners for more fiscal space by lowering already agreed primary surplus targets for 2021 onwards.

Greek bonds were the best performers in Europe last year as investors sought their relatively high returns given much euro-area debt turned negative yielding. Benchmark 10-year yields were steady at 1.18% Tuesday, having touched a record 1.155% Monday.

The government hired Barclays Bank Plc, BNP Paribas SA, BofA Securities, Goldman Sachs Group, HSBC Holdings Plc, JP Morgan Chase & Co. as joint lead managers on the sale.

“I think the Greek deal started slightly tighter than what I was expecting,” said Antoine Bouvet, a rates strategist at ING Groep NV. “Tighter pricing and orderbooks point in the same direction: greater demand than in recent deals, despite the higher duration.”

(Updates with final terms of the transaction in 2nd paragraph.)

--With assistance from Constantine Courcoulas, Lyubov Pronina and Priscila Azevedo Rocha.

To contact the reporters on this story: Sotiris Nikas in Athens at snikas@bloomberg.net;James Hirai in London at jhirai3@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Neil Chatterjee, Michael Hunter

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.