Post by Bozur on Apr 10, 2005 0:57:30 GMT -5
Investors show confidence in first Greek 30-year bond
By Anna Peltola - Reuters
LONDON - Greece yesterday made use of strong demand for euro-denominated sovereign bonds and sold its longest-ever issue, a 5.0-billion-euro ($6.61 billion) bond which matures in 2037, the banks managing the deal said.
The issue follows a string of long-dated sovereign issues — among them a rare 50-year bond from France last week — that pension funds and insurance companies have been keen to pick up as they seek to match liabilities stretching ever further into the future.
In another sign of the interest in the sector, the Dutch State Treasury Agency said yesterday it had asked three of its advising banks to investigate whether bond investors would prefer a new 10-year or 30-year bond. The Dutch government last sold a 30-year bond in 1998.
Greece’s deal is also the first major European government bond Citigroup has helped to sell since its controversial bond market trade last August, which is now being investigated by regulators.
The other lead managers for the syndicated bond deal are BNP Paribas, Deutsche Bank, Morgan Stanley and National Bank of Greece.
The new bond pays a coupon of 4.5 percent and offers investors a yield of 26 basis points over the 4.0 percent German Bund maturing in January 2037, in the middle of a previously indicated price guidance range. The reoffer price is 100.482 percent.
“In LIBOR terms it offers a bit of value... It should attract demand from real money investors who are looking for yield,” said Lionel Oster, head of European government bonds at F&C Asset Management.
A yield of 26 basis points over Bunds swapped to LIBOR would offer investors 15 bps — well above the 10 bps over LIBOR offered by Greece’s 2022 euro bond, said Oster. F&C is among the investors in the new bond.
The issue, due on September 20, 2037, attracted more than 9.0 billion euros worth of orders, a syndicate source said on Tuesday. This meant the borrower could increase the size of the deal to the top end of a previously planned 3-billion to 5-billion-euro range.
“In general, it is a good idea to issue a 30-year bond for Greece, given the level of rates and given the fact that investors now have an alternative to Italy, if they want to get some yield pickup in the 30-year sector,” said Gianluca Salford, European fixed-income strategist at JP Morgan in London.
Spyros Papanicolaou, the head of Greek public debt agency, told Reuters the country had not reached a decision yet on another 30-year bond, but added, “If the market continues to be so good, nothing is to be ruled out.”
Following France
Greece’s deal follows the rare 50-year 6-billion-euro issue from France last week, which received orders of 19.5 billion euros.
In January, a 6-billion-euro 2037 bond sold by Spain attracted orders worth 17 billion euros, and total bids for Germany’s 5.5-billion-euro auction of 2037 bonds rose above 9 billion euros.
More sovereign European issuers could follow on their heels with long-dated issues, analysts say. Italy’s economy minister said in late February the Treasury was watching the 50-year market closely.
Pension funds, insurance companies and central banks took 25 percent of the new issue, said the Greek debt agency. Nearly 19 percent of investors were from Britain, while Greek investors picked up over 16 percent of the bond, and German and Dutch investors took a 14 and 13 percent stake respectively.
Greece has the lowest credit ratings among its eurozone peers, but its 5-billion-euro 10-year bond in February also drew heavy demand as investors proved willing to overlook the budget pressures the country faces.
In the last two months of 2004, both Standard & Poor’s and Fitch Ratings downgraded the sovereign’s debt rating by one notch to “A.” Moody’s Investors Service rates Greece a notch higher at “A1.”
But Oster at F&C said that the ratings posed no problem, as Greece would have to be downgraded several notches to be removed from key indices.
www.ekathimerini.com/4dcgi/news/content.asp?aid=53640
By Anna Peltola - Reuters
LONDON - Greece yesterday made use of strong demand for euro-denominated sovereign bonds and sold its longest-ever issue, a 5.0-billion-euro ($6.61 billion) bond which matures in 2037, the banks managing the deal said.
The issue follows a string of long-dated sovereign issues — among them a rare 50-year bond from France last week — that pension funds and insurance companies have been keen to pick up as they seek to match liabilities stretching ever further into the future.
In another sign of the interest in the sector, the Dutch State Treasury Agency said yesterday it had asked three of its advising banks to investigate whether bond investors would prefer a new 10-year or 30-year bond. The Dutch government last sold a 30-year bond in 1998.
Greece’s deal is also the first major European government bond Citigroup has helped to sell since its controversial bond market trade last August, which is now being investigated by regulators.
The other lead managers for the syndicated bond deal are BNP Paribas, Deutsche Bank, Morgan Stanley and National Bank of Greece.
The new bond pays a coupon of 4.5 percent and offers investors a yield of 26 basis points over the 4.0 percent German Bund maturing in January 2037, in the middle of a previously indicated price guidance range. The reoffer price is 100.482 percent.
“In LIBOR terms it offers a bit of value... It should attract demand from real money investors who are looking for yield,” said Lionel Oster, head of European government bonds at F&C Asset Management.
A yield of 26 basis points over Bunds swapped to LIBOR would offer investors 15 bps — well above the 10 bps over LIBOR offered by Greece’s 2022 euro bond, said Oster. F&C is among the investors in the new bond.
The issue, due on September 20, 2037, attracted more than 9.0 billion euros worth of orders, a syndicate source said on Tuesday. This meant the borrower could increase the size of the deal to the top end of a previously planned 3-billion to 5-billion-euro range.
“In general, it is a good idea to issue a 30-year bond for Greece, given the level of rates and given the fact that investors now have an alternative to Italy, if they want to get some yield pickup in the 30-year sector,” said Gianluca Salford, European fixed-income strategist at JP Morgan in London.
Spyros Papanicolaou, the head of Greek public debt agency, told Reuters the country had not reached a decision yet on another 30-year bond, but added, “If the market continues to be so good, nothing is to be ruled out.”
Following France
Greece’s deal follows the rare 50-year 6-billion-euro issue from France last week, which received orders of 19.5 billion euros.
In January, a 6-billion-euro 2037 bond sold by Spain attracted orders worth 17 billion euros, and total bids for Germany’s 5.5-billion-euro auction of 2037 bonds rose above 9 billion euros.
More sovereign European issuers could follow on their heels with long-dated issues, analysts say. Italy’s economy minister said in late February the Treasury was watching the 50-year market closely.
Pension funds, insurance companies and central banks took 25 percent of the new issue, said the Greek debt agency. Nearly 19 percent of investors were from Britain, while Greek investors picked up over 16 percent of the bond, and German and Dutch investors took a 14 and 13 percent stake respectively.
Greece has the lowest credit ratings among its eurozone peers, but its 5-billion-euro 10-year bond in February also drew heavy demand as investors proved willing to overlook the budget pressures the country faces.
In the last two months of 2004, both Standard & Poor’s and Fitch Ratings downgraded the sovereign’s debt rating by one notch to “A.” Moody’s Investors Service rates Greece a notch higher at “A1.”
But Oster at F&C said that the ratings posed no problem, as Greece would have to be downgraded several notches to be removed from key indices.
www.ekathimerini.com/4dcgi/news/content.asp?aid=53640