Greece to Issue New Debt For the First Time Since 2013

In spite of the fact that Greece has an astounding $327 billion in debt, or 180% debt/GDP, they’ve announced they’re going to issue more debt — which will be valued on July 25th, 2017.

On this news, Greek 5yr bonds plunged in yield to 3.4%, the lowest since the Greek debt crisis of 2012 when yields were sporting a cool 63%.

The Greek Finance Ministry said they’re looking to issue the new debt at a yield of 4.2%. But some skeptics believe it’ll likely get done between 4.3%-4.5% — hardly a yield to be ashamed of, especially when considering the fact that Greece is entirely dependent on the ECB to pay its bills.

This is all part of a larger plan to exit the EU bailout — weaning itself off the EU tit.

With the sale, the government of Prime Minister Alexis Tsipras is seeking to chalk out a path for an exit from the current bailout program, which ends in August 2018, while also capping the country’s financing needs in 2019 — expected to be about 19 billion euros ($22.1 billion). After not being able to convince creditors to reduce its debt burden and being left out of the European Central Bank’s bond-purchase program, Greece is testing the market.

It’s “perfect timing,” said Lutz Roehmeyer, who helps oversee 12 billion euros at Landesbank Berlin Investment GmbH. “It is after getting bailout money, after getting the go ahead for a debt reduction next year, after IMF said it is likely to join the bailout finally, after S&P rating action and still before ECB ends QE and started raising rates.” Roehmeyer already holds Greek bonds and plans to take part in the new issue.

The bond sale follows the successful conclusion of the second bailout review and the disbursement of the first part of the 8.5 billion-euro tranche by the European Stability Mechanism on July 10. The IMF agreed to a new $1.8 billion conditional loan for Greece on Thursday, with disbursement contingent on euro-zone countries providing debt relief.

S&P Global Ratings raised the country’s sovereign credit-rating outlook to positive on Friday, while affirming the long-term foreign currency debt rating at B-, or six levels below investment grade. The credit-rating arbiter increased its outlook from stable.

Greece is also encouraging $4b worth of 2019 4.75% debt holders to exchange for cash, especially since yields are currency in the 3s.

Not too shabby, especially when taking into account Greece is in its 3rd ECB bailout, amounting to over $250 billion and beneficiary of a draconian debt restructuring owed to the private sector that reduced face value by 53%.