Rumors of impending bond issue

By Sotiris Nikas

The remarkable decline in the interest rate of Greek bonds, particularly that of the recently issued five-year paper that has even dropped below 4 percent, is feeding rumors among investors that Athens is contemplating a new bond.

Market professionals note that the yield of the five-year paper, at 3.97 percent from an original 4.95 percent, is particularly small compared to other Greek bonds, which they interpret as “investors’ desire for a new issue.”

There are said to be three scenarios being mulled at the Finance Ministry: The first concerns a three-year issue to draw 3 billion euros at the low rate of 3 percent, the second is a seven-year bond to increase the Greek debt supply in the market, and the third is 18-month treasury bills with a particularly low interest rate, which would also reflect investors’ disposition toward Greece for the 18 months after its issue.