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July 25, 2017

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Greece eyes 1st return to bond market in 3 years

GREECE will make its first return to the debt market in three years today, testing the waters to see if it can begin to wean itself off bailout loans after tough reforms.

Athens “announces today that it intends to offer new euro-denominated fixed rate notes due 2022,” the finance ministry said in a statement yesterday.

“Pricing of the new notes offering is expected to occur on 25 July 2017, subject to market conditions, with settlement expected to occur on 1 August 2017,” the ministry said.

BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Merrill Lynch have been picked to handle the five-year sale, the ministry said.

Athens has also invited holders of an existing five-year bond, due in 2019, to a switch and tender offer.

“The cash purchase price to be paid for (the existing 2014 bond) will be equal to 102.6 percent of the nominal amount,” the ministry said.

The last time Greece issued bonds was in 2014 under the coalition government of Antonis Samaras with a yield to investors of 4.95 percent.

The goal of current Prime Minister Alexis Tsipras is a lesser yield, according to reports. Greece currently has no need to draw money from the bond markets — but it is a psychological milestone.

The European Stability Mechanism will keep feeding the debt-ridden country with low interest rate loans (0.8 and 1.8 percent) until the end of the bailout program in July 2018.

Earlier this month, eurozone finance ministers approved the latest 8.5 billion-euro (US$9.9 billion) disbursement of the bailout, just in time for Athens to meet major debt repayments.

This gives Athens the chance to test without major risks its credibility in the markets.

The Greek economy nearly collapsed in 2010 under a mountain of debt and it had to be bailed out by its eurozone parthers three times to prevent it bringing down the single currency bloc.

The European Union’s economy commissioner, Pierre Moscovici, said Greece is starting to see the positive results from the tough austerity measures it has undertaken.


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