Greek bankers are predicting that large American emerging market accounts will invest in the nation, taking into consideration the expected and alluring yield.
The exact timing remains to be seen. Two questions remain regarding the nation's desire for a five-year benchmark-sized euro-dominated bond, at the same time the U.S. bond market opened- What is the rate of the deal and who will purchase it?.
The deal is anticipated to go into transaction tomorrow. One banker commented, "I've heard a rumor that one bank offered to underwrite the whole thing. So you know demand is there...They've done a lot of non-deal marketing in the US. Their expectation is to sell to big EM funds in the US". Financiers believe that premier investors could be important players in the deal.
In March, after over four years, Piraeus Bank sold its first bond. The 5% 500 million euro March 2017 bond, granted investors a 5.125% yield. It is now trading at a 4.125% yield. A five-year bond from Greece with an approximate 5% yield, would result in a price of 400bp over mid-swaps.
According to Kathimerini, Dromeus Capital Managing Partner Jason Manolopoulos described, "I'm very interested in the new bond. I would expect them to issue around 5%, roughly 200bp over Portugal, even a bit below...I am a happy holder of Greek debt. Greece is cheap versus other peripherals".
Historically, arising market investors have an inclination for dollar currency bonds, although the American desire for euro currency bonds is increasing. This can be seen in the case of Slovenia last year; one U.S. emerging markets account picked up a 1.5 billion 2016 private placement from the nation. Greece's last capital markets bond sale was in 2010; the Hellenic state issued a 5-year bond, set at 310bp across mid-swaps. There have been two bailout efforts at a 245 billion euro value, since.
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