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New Greek bond fifth most traded euro debt after deal

Greece’s new soon to be sold bond is already the fifth most traded euro-denominated sovereign debt in Europe, as Athens marks a successful return to the markets for the first time in three years this week.

The high levels of trading in the so-called “grey market” – where investors can buy and sell bonds before they are issued – is a sharp change for Greece’s usually thinly-traded securities.

Athens last issued a bond in 2014 and has been broadly locked out of the debt markets after seven years of bailouts. Most of its €320bn in external debt is held by creditors in the eurozone and International Monetary Fund rather than the private sector.

Data from Trax, a subsidiary of MarketAxess, shows €160m of the €3bn 5-year bond changed hands on Wednesday. That makes it the fifth highest euro-denominated security and the 17th highest in Europe today.

The bond will officially launch on August 1. It attracted 200 investors during its pricing yesterday, with half of its buyers swapping their holdings of an existing five-year bond after the government enticed investors with a €40m premium.

Greece’s Syriza government has hailed its market return as the latest step in a slow economic rehabilitation. The country is hoping to finally stand on its own feet after a near-decade long depression when its bailout expires next August.

The yield on the new debt is also lower than the previous 2014 bond, at 4.625 per cent, and will encourage Syriza to plough ahead with more bond issues in the coming months.

Still, the level of demand, which was lower than Greece’s previous foray into the markets in 2014, highlights lingering concerns over the country’s 180 per cent debt to GDP pile and fears that eurozone creditors will not afford major debt relief to Athens at the end of its bailout programme.

“Just how convinced the market and indeed senior policy makers within the Greek establishment are about the stability and debt sustainability of the country remain mixed”, said Richard McGuire at Rabobank.

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