The Greek government is keen and determined to return to the bond markets for the first time again after a test exit in 2014. For Athens the return to the capital markets is important in order to show that the reforms under the current bailout program are working and that it can gain again the investors trust.
But when will this return happen? The scenarios are plenty, with the most prominent to claim it will happen in the last week of July. The Greek government had implied that August was a bad month for such a move.
A source close to the situation, who preferred to remain anonymous due to the sensitive nature of the issue, told CNBC Tuesday that Greece’s market return is “most likely next week as the Greeks seem to prefer to wait for the IMF’s EB (International Monetary Fund Executive Board) meeting on Thursday and for (credit rating agency) S&P to make announcements regarding Greece’s debt rating on Friday.”
Members of the IMF’s executive board are due to meet Thursday to discuss issues related to the Greek bailout, including the sustainability of its debt. The Fund’s opinion on the Greek bailout is crucial given that it’s promised to contribute to the financial rescue, although it hasn’t yet said by how much. The IMF has also been a vocal supporter of making Greece’s debt more sustainable.
Rating agencies also have an influence on how global investors react to a Greek bond issuance. The S&P confirmed to CNBC that it’s going to discuss the situation of Greece on Friday but for regulatory reasons it cannot unveil whether there will be a rating upgrade.
Except IMF and S&P, there is also one more important factor: the European Central Bank. The board is meeting today, Thursday, a press conference by ECB head Mario Draghi is expected later today.
According to a Reuters report, Greece has hired six banks to arrange its comeback sovereign bond deal.
“One source said that Greece has mandated Bank of America Merrill Lynch, BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and HSBC for a five-year trade.
The source added that the deal could arrive as soon as next week, but that timing remains uncertain as the sovereign awaits signoff by its official creditors.”
The deal could also form part of a liability management exercise, according to two further sources. One option considered was for investors to extend maturities via a tender for its €3bn due April 2019s. Another option would involve tendering for – or buying back – so-called “strip” – securities created as part of Greece’s €206bn debt restructuring in 2012.
An interest rate as lows as possible is the target.
The European Central Bank (ECB) estimates that Greece’s return to the markets should be done with a reasonable interest rate and in a way that will ensure the continuity of the venture.
The ECB places special emphasis on the implementation of the programme in order to persuade the markets about Greece’s prospect to exit the crisis, Bank of Greece (BoG) governor Yannis Stournaras said to BoG’s general council, according to exclusive information of the Athens Macedonian News Agency.
Stournaras did not revealed what is a reasonable interest rate, though.
Private Skai TV reported on Thursday, that the book for offers is expected to open upcoming Monday (July 24) and remain open for 24 hours. On Monday the same network had claimed that book was to open …two days ago.
Nevertheless, according to the same source, the Greek economic team targets an interest rate between 4.3% and 4.9% for the 5-year bond.
Government spokesman Dimitris Tzanakopoulos declined to confirm the reports based on ‘anonymous sources’ nor did he revealed a specific date for Greece’s return to the markets. he added that all this information comes from local and international press reports and not form the government.
PS in case you didn’t notice so far: 1000+1 people will decide whether and when Greece will return to the markets.