Greece raises 3bn euros via 5-year bond in third outing this year

ATHENS: Greece raised 3 billion euros ($3.60 billion) from the sale of a new five-year bond on Wednesday, its third debt sale this year, as its public finances are strained by the fallout of the COVID-19 pandemic.

The sale comes after its one-notch credit rating upgrade by S&P last month to 'BB' with a positive outlook, meaning a further upgrade could come that would put it closer to a return to investment-grade ratings. Demand for the issue exceeded 20 billion euros, lead managers said.

The epicentre of the euro zone debt crisis a decade ago, Greece is now within two notches of investment-grade status with two of the three main rating agencies despite COVID-19 having pushed its debt-to-GDP ratio above 200%.

The five-year bond will price at mid-swaps plus 47 basis points, around 0.20% and is expected to pay a coupon of 0%, according to lead managers. It was Greece's third bond market tap after the sale of 10- and 30-year paper earlier this year.

The last time Greece sold a five-year bond was in February 2019 with the paper priced to yield 3.6%. Its debt agency also sold three-month T-bills on Wednesday, priced to yield -0.4%.

Greece had mandated Barclays, BofA Securities, Citi, Commerzbank, Morgan Stanley and Societe Generale to jointly lead manage the sale of the bond, which matures on Feb. 12, 2026.

The tap will help its public finances which have been strained by lower revenues and higher spending to alleviate the economic fallout of the pandemic.

Greece ended last year with a budget deficit of 9.7% of gross domestic product as its economy slumped 8.2%. Its primary budget balance, which excludes debt servicing outlays, reached -6.7% of gross domestic product.

This year, both the general government's budget balance and the primary budget balance are expected to stay in deficit mode with gaps of 9.9% and 7.2% of GDP respectively.