By DW
The Greek government has started an auction of five-year sovereign bonds. The measure serves as a test run in preparation for the debt-ridden nation’s return to capital markets. Major banks are handling the sale.
Greece is trying its first return to the debt markets in three years on Tuesday, testing the waters to see if it can begin to wean itself off bailout loans from international lenders after tough reforms.
The auction of five-year government bond is being overseen by a consortium of leading bankers from BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Merrill Lynch. They said the bond was drawing in enough demand to cut the likely return to investors.
The new bond maturing in 2022 is reported to yield around 4.75 percent, tighter than initial guidance of around 4.8 percent and crucially for the Greek government, below the 4.9 percent on Greece’s last five-year bond sold four years ago. Investors have placed over six billion euros ($6.9 billion) for the bonds, but it is unclear at this stage how much will be issued.
It’s the first time since the new Greek government was formed in 2015 that such a measure had been taken, the Greek Finance Ministry confirmed.
The current bond auction is seen as an important, symbolic step for Athens to lure back investors.
No time pressure
As long as Greece is supported by credit from the international bailout program, which runs until summer 2018, it will not be forced to depend on private finance.
Earlier this month, eurozone finance ministers approved the latest 8.5-billion-euro ($9.9-billion) disbursement of the current bailout package, just in time for Athens to meet the deadline for major debt repayments.
The southern eurozone nation wants to stand on its own feet financially next year which requires that it can independently get money via capital markets.
In a sign that Greece is finally turning the corner, its economy is projected to grow by 2.1 percent this year, after no expansion at all in 2016.
