New bonds support Greek exit from bailout in 2018

Subject

Greece’s return to bond markets.

Significance

After three years of market exclusion, the Greek state has issued five-year debt totalling 3 billion euros (3.5 billion dollars). The placement was hailed as success by the government and international media as the first step towards rebuilding Greece's track record in the open market. The new debt issue also solidifies hopes of Greece exiting its third bailout programme as planned in August 2018. As open market issuances carry greater financing costs than funding obtained from Eurogroup, the Greek government will largely use them to smooth the debt repayment profile and for publicity purposes.

Impacts

• The return to financial markets represents a political victory for the Tsipras government.
• The successful new debt placement will improve the government’s negotiating position with international lenders.
• The government debt placement will establish a benchmark for further issuance from Greek banks and corporates.