The 30-year bond issued by our country, with offers exceeding 32 billion euros, is catching on in the markets. In fact, the strong demand dropped the interest rate to 4.25% from 4.3% that it was initially. Investors give a vote of confidence in the growth prospects of the Greek economy, while this positive development follows the upgrade of the outlook by S&P and the increased surplus.
The entire process of the syndicated issue has been undertaken by BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs Bank Europe, JP Morgan and Piraeus Bank.
Restructuring of the Greek debt
At the same time, Greek debt restructuring continues unabated with Greece’s decision this year to repay up to 5 billion euros of its transnational loan memorandums (GLF) ahead of schedule.
The current 30-year bond on the market matures on January 24, 2052, and its current yield is 3.9%, with a coupon of 1.875%. The initial issue was 24/3/2021 and the Greek State had drawn 2.5 billion euros from the 25.8 billion euros that was the total amount of the offers. Then on 8/9/2021 there was a reissue for €1 billion with total offers at €9.6 billion.
It is worth recalling that in the spring of 2022, 2.645 billion euros were returned to the partners, while in the same year the country’s obligations to the International Monetary Fund were zeroed out (1.86 billion euros were paid, which would normally be paid at the beginning of 2024).
Eurozone first memorandum loans amount to €52.9 billion with repayment periods from 2020 to 2040 and at 3-month Euribor + 0.5%, which makes them expensive as the 3-month Euribor is 3.94 %.
From this year, the servicing of EFSF (European Financial Stability Fund) loans of 141.8 billion euros with repayment in 2056 began, while from 2034 an additional 86 billion euros are added from the ESM until 2060.
Outlook upgrade
S&P recently upgraded the outlook of the Greek economy to “positive”, while it had given Greece an investment grade in October 2023.
Analysts report that the Greek economy will continue to grow, while despite the macroeconomic challenges, growth will exceed the eurozone average. S&P points out that very high debt is falling and will continue at the same pace, calling on the government to maintain fiscal balance and discipline.
The rating agency emphasizes that the positive outlook reflects the expectation that fiscal discipline will continue to reduce debt and that the agency could upgrade the rating within the next 24 months. A necessary condition, however, as analysts report, is to continue the prudent fiscal policy and strengthen competitiveness.
In this direction, analysts emphasize that the Recovery Fund and the preservation of primary surpluses create the right conditions to increase the competitiveness of the Greek economy and reduce the investment gap from Europe.
The above paves the way for a new upgrade of the Greek economy, while a downgrade would be possible if the increased current account deficit exceeds forecasts. Something that can happen if geopolitical uncertainties intensify.
The house predicts that Greek GDP will strengthen by an average of 2.4% between 2024 and 2027, which is due to the increase in investment through the funds of the Recovery Fund, the improved picture presented by the spending of households and the turning of the page in banks. In fact, S&P emphasizes that the Greek economy is 22% smaller than before the debt crisis, which shows that there is scope for continued sustainable growth.
