Greece Raises €3.5 Billion in Successful 15-Year Bond Issue

Greece has achieved a successful return to the capital markets with its completion of a 15-year syndicated bond issue, raising €3.5 billion ($3.86 billion).

The bond was issued at an interest rate of 4.45%, attracting bids totalling over €13.4 billion, with cash bids amounting to €11.6 billion and 1.8% in bond swaps. This marks Greece's first return to capital markets since the June 25 elections, taking advantage of a favorable climate in the domestic bond market.

The bond issuance is part of a larger program aimed at reducing Greece's public debt through the early repayment of €5.5 billion in loans that were signed during the country's initial memorandum. BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs, JP Morgan, and National Bank served as lead managers for the syndicated bond.

Greek National Economy and Finance Minister Kostis Hatzidakis expressed satisfaction with the successful completion of the bond, viewing it as a positive indicator of Greece's forthcoming investment grade. He noted the significant oversubscription despite the global economic uncertainties, stating, "The results of the issuance attest to the forthcoming investment grade for Greece, which will lead to further reduction of the economy's borrowing rate."

The maturity extension of Greece's debt, reduction in financing needs, and mitigation of risks arising from higher interest rates were cited as key factors contributing to the bond issue's success. Kostas Boukas, an asset manager at Beta Securities in Athens, emphasized that Greece has covered its borrowing needs for this year and expects its gross financing requirement to decrease to €5.5 billion annually in 2024 and 2025, down from about €9 billion prior to the bond sale.

Prime Minister Kyriakos Mitsotakis, having gained the necessary support in the June elections, has outlined his economic plan to deliver robust growth, achieve an investment-grade credit rating, and repay €5.5 billion of bilateral bailout loans ahead of schedule. Mitsotakis underscored the commitment to early repayment as a signal to investors, highlighting his intention to make Greece an attractive destination for foreign investments.

The successful bond issue and Greece's fiscal plans align with the country's objective of steadily reducing its public debt to under 140% of GDP by 2027. This achievement, coupled with the positive investor response, reflects growing confidence in Greece's economic prospects and the government's commitment to sound fiscal management.

By fLEXI tEAM