Entering the market with a bond of up to 3.5 billion and an ally of Fitch


The executives of the Debt Management Organization are ready to … press the button on Tuesday for the new exit of Greece in the bond market, looking forward to tonight’s announcements from the house of Fitch, which is estimated to change to a “positive” perspective of its rating. Greek debt, indicating, in this way, that in his next announcements, most likely, the country will be upgraded.

ODDIH was ready for the first exit in the markets this week, but it was deemed appropriate to … slow down, on the one hand because the first bond issues in the eurozone – and especially in the weaker economies – showed that investors are leading to much higher interest rates anticipating the expiration, in March, of the ECB’s extraordinary securities purchase program and, on the other hand, because there are indications that Fitch’s announcement announced tonight will work positively for Greek bonds,

By all accounts, it would be a big surprise if the third-largest rating agency went up tonight in the country, which has risen to “BB” and remained stable in previous ratings. The outlook is, after all, determined by the house as stable, which means that a change of rating is not imminent.

However, Fitch is very likely to revise the outlook to a positive one, which means that it is announcing an upgrade in 2022. It is certainly considered a major revision of the house’s forecast for the economy, which proves to be too conservative. It is characteristic that he initially expected a growth rate of only 3% for 2021, which he revised to 4.3%, while the latest estimates raise it to almost double the percentage.

In its latest announcement, Fitch had pointed out as excessive “weights” for the assessment of the Greek State the excessive debt and the large red loans in the portfolios of the banks. In both of these issues – and especially with regard to the red loans – a lot of progress has been made, which the house will be called to evaluate in their announcements today, as a result of which it is reasonably expected that at least the outlook outlook will be revised to positive.

As areas that would justify a change in the rating, for better or worse, Fitch has noted the course of the debt, the impact of the pandemic on the economy and the implementation of the program to reduce red loans by banks.

With support from Fitch, the Greek government is estimated to facilitate the effort to raise up to 3.5 billion euros from the new 10-year bond issue planned, without missing the yield of more than 2%. It is noted that the ten-year yield on the secondary market has stabilized in recent days just over 1.5%, at levels much higher than the historical lows recorded last summer.

ODDIH will have an “ally” in this issue, the ECB, which will continue to buy Greek bonds throughout the first quarter of 2022, ie until the end of the emergency program for the pandemic. According to Societe Generale, the ECB is expected to buy bonds worth 3 billion euros in the first quarter, raising the total Greek bonds it bought under the emergency program to 39 billion euros.

It is worth noting that these purchases not only helped the State continue to borrow at low cost during the pandemic, but were … sweeping in nature, as, according to the calculations of the French bank, they exceeded the amount of new bonds issued the Greek State.

After the end of the emergency program, the situation will become more difficult, as Greece is not part of the permanent quantitative easing program and the ECB will buy the country’s bonds only in the event of some turmoil in European markets due to the pandemic.


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