The road to the new exit of Greece to the markets in the immediate future is paved by the upgrade move of the rating agency Standard & Poor’s (“BB” from “BB-” with positive prospects) bringing closer the issue date, which the Public Debt Management Agency was already preparing in the framework of the annual planning, stimulating the state coffers with cheap liquidity.
The messages about cash shows a manageable situation, the amount of which is around 30 billion euros, but the strict lockdown has increased the cost of support measures from 7.5 billion euros to 14 billion euros, according too the government financial staff.
Given the ideal conditions in the Greek bond market and of course the interest in securities issues, in the second half of the year, in part based on the program of the European Central Bank, analysts see that Athens will take advantage of the environment and possibly proceed to two issues by the fall. It is not ruled out that the annual lending target will exceed 12 billion euros this year, while as for the type of the new issue, all scenarios are open, with the issuance of a short term of 5 or 7 years being discussed, as well as the reissue of a 10-year bond.
The amount may be close to 2.5 billion euros. It is noted that in January the Public Debt Management Agency had proceeded to a 10-year issue, and in March to a 30-year issue. The country has raised 3 billion euros through the exchange of bonds with Greek systemic banks, 3.5 billion euros with the 10-year bond on January 27 and an interest rate of 0.807% and 2.5 billion euros through the 30-year bond on March 17 , with an interest rate of 1.956%.
Ticket for a new upgrade
The American credit rating agency has punched the ticket for a possible new upgrade in the next 12 to 18 months and the Greek economy is now on the way to gaining the investment level from which it is two steps away. The credit rating had plunged into the “junk” category, since 2010. S & B forecasts a recovery of 4.9% in 2021 (-8.2% in 2020) and 5.8% in 2022, the deficit will reach 6.9% of GDP (9.7% in 2020) and debt will fall to around 201% of GDP in 2021 (206% in 2020).
Despite the high public and private debt, the main reasons for the move by Standard & Poor’s are the significant fiscal “cushions”, the government shielding and tax relief measures, the additional boost from the Recovery Fund, with the agency expecting that the government will accelerate structural reforms and fiscal consolidation, thus achieving the declining trend of public debt under conditional GDP.