Nuovo bond presto in arrivo?
Greece ponders high-risk bond move
By David Oakley in London and Kerin Hope in Athens
Published: February 17 2010 18:46 | Last updated: February 17 2010 18:46
Expectations are rising in the markets that
Greece will attempt to issue new bonds next week, in a high-risk move to boost credibility among investors.
But bankers warn that another bond syndication disaster could shut the country out of the markets and force the European Union to turn implicit support for Athens into actual loans.
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One syndicate banker in London said: “There are conversations going on between bankers and investors over pricing for a potential deal. The markets have stabilised, so it could be a good time for the Greeks to issue even a small amount.”
In Athens, there was also speculation that Greece would return to the market to raise at least €3bn-€5bn ($4bn-$6.8bn) through another
syndicated loan.
A finance ministry official said no decision had been taken.
Greece had been expected to launch a 10-year syndicated loan by the end of February following a heavily oversubscribed five-year offering last month, which raised €8bn – enough to cover expiring maturities and pay salaries and pensions until the end of March.
Bankers and traders in London and Athens said Greece would have to pay up to 20 basis points more than yields on existing bonds of a similar maturity, known as the new issue premium.
Typically, a European sovereign only has to pay a premium of between 5bp and 10bp.
“If Greece goes for a 10-year bond at this particular point, the premium could be quite a bit higher – even if spreads stay calm in the next few days,” one trader said.
Several bankers agreed that Greece should raise as much funding as it could in the next four weeks before it had to roll over about €20bn of maturing debt in April and May.
“The sooner they resume borrowing, the better,” one banker said. “This amount of borrowing can’t be left until the last moment.”
Speculation is also rising over which banks will be mandated to sell the bonds. This is because of controversy over last month’s five-year deal, which sold off in the secondary markets after Athens denied a Financial Times story that it was
wooing the Chinese to buy up to €25bn of debt.
Spain, another peripheral country that has come under pressure in the bond markets recently, on Wednesday successfully raised €5bn in 15-year bonds at 106bp over German bunds, Europe’s benchmark market.
It was heavily subscribed but some bankers said the new issue premium of 10bp was too high.
But the fact that the Spanish comfortably managed to issue debt was seen as positive for the eurozone.
Other peripheral economies such as Portugal and Ireland have also successfully raised money in the markets recently, calming fears of contagion.
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