The implementation of the plan to ease Greece’s financial needs over the next two years is in full progress. After the announcement of the early repayment of the bilateral loans with the countries of the eurozone (GLAs) for 2024-2025, the issuance of a new 15-year bond is being promoted in order to offer it as an “exchange” to the holders of two expiring Greek bonds within the next two years.
If everything goes according to plan, out of the approximately 17 billion euros of debt repayment over the next two years, the Public Debt Management Agency (PDMA) will have repaid 7 billion euros by the end of 2023 and next year’s loan program can even be limited to 5-6 billion euros without further affecting the level of cash reserves.
Given the uncertainty in the markets due to the increase in interest rates and bond yields, Greece will be able, after the implementation of the early repayment plan for the next two years, to cover the next year with two new bond issues without being “squeezed” with the rest of the eurozone countries which will have to issue bonds worth hundreds of billions of euros.
As for the debt service interest, it is planned that it will be covered in a very large percentage by the primary surpluses that will correspond – or at least this will be sought to correspond to – more than 2% of GDP.
Yesterday, PDMA announced that it plans to issue a 15-year bond maturing in 2038. BNP Paribas, Bank of America, Deutsche Bank, Goldman Sachs, JP Morgan and National Bank have been appointed joint managers. The issuance of the bond is scheduled to take place on Tuesday if, of course, market conditions allow it. Given that we are going through a period of significant rise in bond yields – the Italian 10-year has reached 4.4% and the corresponding Greek is at 4.1% – it is obvious that the cost of new borrowing will be significantly higher than 4%. Regarding the amount, it is expected that it will exceed 1.5 billion euros, although it will depend on bondholders who are called to exchange their securities early. The two bonds that come into focus are the following:
A bond maturing in 2024 totaling 2.5 billion euros with a 3.45% coupon and a bond maturing in 2025 for a total amount of 3 billion euros and a coupon of 3.375%.
