Greece will sell its first bond in four years.
We know it will aim to raise up to 2.5 billion euros of five-year paper via syndication and wants to pay less than 5.3 percent – remarkable since only two years ago it was tipped to crash out of the euro zone and yields on 10-year debt peaked above 40 percent on the secondary market. They dropped below six percent for the first time since 2010 on Wednesday.
Athens has no pressing funding needs but wants to test the waters as part of its strategy to cover all its financing from the market by 2016. It still has a mountain to climb and may well need more debt relief from its EU partners to corral a national debt that is not falling much from 175 percent of GDP.
But for all that, it’s a propitious time to borrow. Peripheral euro zone bond yields have tumbled this year, benefiting from wobbles in emerging markets, and now European Central Bank consideration of printing money has given bond prices a further lift.
There will be no shortage of demand with more than 11 billion euros of interest from investors logged by the close of play yesterday. As a result, the pricing could even drop below 5 percent. Germany’s Angela Merkel will visit Athens on Friday.
Already out of its bailout, Ireland will hold its second bond auction of the year, aiming to sell 1 billion euros of 10-year debt. It too is under no funding pressure.