Greece still has a massive debt burden. But the default risk versus the yield reward on a five-year bond offering is drawing strong interest.
By Dimitra DeFotis
Demand is so good for a fresh international Greek bond offering that yields are reportedly dropping.
Greece could raise 3 billion euros ($3.5 billion) in a five-year bond sale that is its first internationally since 2014; sale terms were expected to be finalized Tuesday. Demand, based on orders, exceeds 6.5 billion euros, Bloomberg reports. Greece has been drowning in debt since its financial crisis erupted in 2010, but it received another tranche of money from European creditors in June to make July payments. And more recently, the International Monetary Fund finally offered a financial lifeline and continued its call for Greek debt relief. In addition, S&P Global made positive comments on the Greek credit outlook late last week.
The new bond, maturing in 2022, could yield between 4.625 and 4.75 percent according to reports. The figures are below initial guidance above 4.8 percent, and below the 4.95 percent yield on the last five-year bond issued in 2013, according to a Financial Times story quoting anonymous people close to the sale.
The Global X MSCI Greece exchange-traded fund (GREK) was up 0.3% in recent trading. The ETF is up 37% so far this year, topping the performance of the iShares MSCI Emerging Markets ETF (EEM), which is up about 25%.
