By Christopher Thompson and Ralph Atkins in London and Kerin Hope in Athens
Greece, the former sick man of the eurozone, is preparing for a return to capital markets as early as this week, as the government in Athens takes advantage of cheap global borrowing costs to launch its first sovereign bond since 2010.
JPMorgan and Deutsche Bank have been mandated to manage the bond, believed to be between €2bn and €3bn in size, following talks with a number of investment banks, according to people familiar with the situation.
Greece’s benchmark borrowing costs on a 10-year bond have fallen to a four-year low of just over 6 per cent, down from over 8 per cent in late January, as yield-starved investors who once spurned Europe’s periphery countries pile back in.
One person involved in talks said they expected an issue “in the latter half of the week”.
A sovereign issue would come after Piraeus, Greece’s biggest bank by assets, last month ended its five-year absence from capital markets with a €500m bond issue, which was six-times subscribed. Anthimos Thomo-poulos, Piraeus chief executive, said Athens should also “take advantage of the momentum”.
But many investors remain cautious. Greece’s debt to gross domestic product ratio is still high and rising, warned Salman Ahmed, fixed-income strategist at Lombard Odier Investment Managers. “That was one of the key reasons why they got into trouble in 2010, and that has not changed.”
Rick Rieder, chief investment officer for fixed income at BlackRock, said: “We would buy it [Greece] in moderate sizes, depending on the pricing” but “the risk-reward is better in places like Portugal and Slovenia”.
Last week, eurozone finance ministers signed off on a long-delayed €8.3bn aid tranche for Greece. The money had been held up since September with the troika of lenders – the European Central Bank, the European Commission and the International Monetary Fund – insisting that Greece implement more reforms.
Yannis Stournaras, finance minister, said he believed Greece could issue three- or five-year bonds in the first half of the year, and noted that Athens’ larger than expected primary budget surplus would also fill the gap. Deutsche, JP Morgan and the Greek finance ministry declined to comment. (FT)
