Greece's new five-year bond highly symbolic but long road ahead

Posted July 26, 2017

Greece looks set to return to the worldwide bond markets following a three-year absence, according to a document released on Monday.

Greece raised three billion euros (3.5 billion USA dollars) selling five-year state bonds at a 4.625 percent interest rate in what was the country's first test return to worldwide bond markets in three years, Greek national news agency AMNA reported on Tuesday.

Greece is preparing to tap worldwide bond markets for the first time since its bailout in 2015 as it tests the appetite for debt and tries to wean itself off loans.

"This choice is a significant step, part of Greece's strategy to regain viable and steady access to worldwide markets", Tsipras's office said in a statement.

It said it had mandated BNP Paribas, Citigroup Global Markets, Deutsche Bank, Goldman Sachs, HSBC and Merrill Lynch as joint lead managers for the benchmark size offering. Tuesday's return to bond markets is widely seen as a test run for the Greek authorities before next year's third bailout program expiration.

Reuters first reported a year ago that Greece was considering the possibility of two or three small bond issues before the expiration of the present bailout programme.

Demand reached 6.5 billion euros for the new bonds as well as the parallel switch offer from an older issue, according to government sources.

And in another a sign that the country is turning a corner the economy is projected to grow by 2.1 percent this year - after no growth at all in 2016.

Meanwhile the International Monetary Fund last week approved a one-year, $1.8-billion (€1.54 billion) loan programme for the country.

Moscovici said Tuesday that debt relief could come once Greece successfully implements promised reforms and completes its previous year under the bailout programme, although he said a decision on what measures to undertake could be made earlier.

Debt relief has been the major bone of contention between the government of Prime Minister Alexis Tsipras and the eurozone, which had delayed the deal to disburse the latest bailout funds.