International banks have been mandated to sell a benchmark
five-year, euro-denominated bond under British law, with the sale to
be completed "in the immediate future," the country's finance
ministry said in a statement.
According to sources speaking to Reuters and Thomson Reuters news
and information service IFR, pricing is set for Thursday. Greece
initially priced the sale at a yield of between 5 and 5.25 percent
and has already attracted more than 11 billion euros ($15.21
billion) of investor interest.
"We aim to raise up to 2.5 billion euros," one Greek government
official said. "It will be a great success if the coupon is below
The sale is an important milestone for one of Europe's most troubled
economies. The last time it sold bonds, as opposed to very
short-term paper, was back in March 2010.
Greece has been kept afloat since by 218 billion euros of European
Union/International Monetary Fund bailout money and about 15 billion
euros of treasury bills.
Athens has no pressing funding needs but wants to test the waters
for more and bigger bond sales in the future, as part of its
strategy to cover all its funding needs from the market by 2016.
Bailout payments from the EU expire later this year and Greece has
said it needs no further bailout to stay afloat.
The IMF welcomed the news, saying it proved the country's tough
austerity policies, which have helped eliminate its underlying
budget deficit, were working.
"This is an important milestone and clearly speaks to the success of
the (bailout) program," the head of the IMF's Greek mission, Poul
Thomsen, told reporters.
The sovereign has hired Bank of America Merrill Lynch, Deutsche
Bank, Goldman Sachs International, HSBC, JP Morgan and Morgan
Stanley to arrange the deal.
POLITICS PLAY ROLE
Athens originally planned to tap bond markets in the second half of
the year, after more tangible evidence that its ongoing, six-year
recession is over.
But rapidly falling bond yields and pressure to produce an economic
success before the European Parliament elections in May have
persuaded Prime Minister Antonis Samaras and his fragile coalition
government to bring the sale forward.
In a dramatic turnaround, existing Greek 10-year bond yields dropped
below 6 percent for the first time in four years on Wednesday, down
from about 40 percent two years ago when Athens imposed severe
losses on private bondholders in a 130-billion euro restructuring.
International investors signaled they were keen to buy Greek debt as
early as Tuesday, when foreigners snapped up about 80 percent of a
1.3 billion euro six-month T-bill issue.
Greece's debt currently stands at about 320 billion euros, or 175
percent of GDP. It is rated nine notches below investment grade at
Caa3 by Moody's. Standard and Poor's and Fitch rank Greece six
notches below investment grade at B-.
But despite its size, the country's debt is attractive to investors
because its 2012 restructuring has made it sustainable for 10
years, the head of euro zone rescue fund ESM Klaus Regling said on
[to top of second column]
About 80 percent of Greece's debt is in the hands of the European
Union and the International Monetary Fund, at very low interest
rates and on a long repayment schedule. Private creditors are
holding just about 30 billion euros of bonds with maturities between
10 and 30 years.
The Greek opposition opposed the bond sale, accusing Samaras of
acting hastily for party-political reasons. "Going out to markets is
one thing. Exiting the crisis is another," said the Democratic Left
party. Samaras's ruling coalition has a parliamentary majority of
just two seats.
DON'T FORGET THE JOBLESS
Public anger about the economic pain in still running high in
Greece, which has seen unemployment soar to nearly 28 percent and
almost a quarter of whose economy was wiped out in the
Labour unions staged a nationwide strike on Wednesday to protest
against austerity policies imposed on the country by its foreign
creditors, including Germany, whose Chancellor Angela Merkel will
visit Athens this week.
"All the joy about going out to the bond market shouldn't make us
forget that 1.5 million people are unemployed in Greece," said Nikos
Koutsoukis, senior official at GSEE, the country's biggest private
sector labour union.
For all the green shoots, it is too early to talk about long-term
economic stability. Thousands of businesses closed across Greece
But economic data released on Wednesday add to evidence that its
economy is bottoming out after six years of recession that wiped out
almost a quarter of its gross domestic product.
Industrial production rose in February at an annual pace of 1.7
percent, the first time the reading rose for a third consecutive
month since the end of 2007.
PPC <DEHr.AT>, the country's biggest power producer is set to become
later this month its first state-controlled company to issue a bond
since the debt crisis erupted.
($1 = 0.7234 euros)
(Additional reporting by Helene Durand in London, George
Georgiopoulos, Costas Pitas and Renee Maltezou in Athens and Anna
Yukhananov in Washington; writing by Harry Papachristou; editing by
Jeremy Gaunt and Andrew Heavens)
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