May 14, 2018 / 12:09 PM / a year ago

EXCLUSIVE-Greece plans more bond issues to shore up post-bailout future

* Athens eyes two more bond issues by year end

* Country building 20 bln euro cash buffer for post-bailout period

* Issues hinge on market conditions, official says

By Lefteris Papadimas

ATHENS, May 14 (Reuters) - Greece wants to tap bond markets twice before year-end and may sell its first 10-year issue for a decade, in an effort to convince investors that it does not need any more external aid after its bailout programme ends in August, sources said.

The heavily indebted nation, shut out of bond markets in 2010 as it fell into an economic depression, has been tiptoeing back into them after carrying out reforms in return for bailouts from the European Union and International Monetary Fund.

Two government officials with knowledge of the matter said Athens wanted to raise up to 4.5 billion euros in total from two bond sales in the coming months, depending on market conditions.

One of the issues could be a 10-year bond of around 2.0 -2.5 billion euros in size. Greece has not sold debt of that maturity since 2008, just before the global financial crisis erupted and tipped Greece into a prolonged contraction that shrank its economy by roughly a quarter.

“The specific time has not been decided yet ... it depends on the market conditions,” one of the officials said on condition of anonymity.

The other issue would have a maturity of less than seven years and aim to raise around 1.5-2.0 billion euros.

The official said that if conditions in the markets change then Athens would adjust its plans on the number of issues.


Prime Minister Alexis Tsipras wants to exit the current bailout when it expires on Aug. 20 without any more external support, although some economists say Greece would be wise to secure a precautionary credit line rather then relying entirely on bond markets.

Greece’s central bank has been among those arguing for Athens to arrange an EU credit line to safeguard the nation’s finances against another global financial crisis or an international trade war. Greece has the euro zone’s heaviest debt burden, at about 180 percent of gross domestic product.

It has tapped markets twice in the past 12 months, selling a seven-year bond in February and a five-year bond in July 2017.

“Our primary target is to fill specific points in the maturity curve and show consistency to the markets,” one official said.

The second official said Greece was able to cover its debt servicing needs for the next two years.

“We have liquidity of about 20 billion euros and we can cover our bills for at least two years ... until early 2020,” the second official said. “That means that even without a single issue we can cover our needs.”

Greece is facing debt payments of about 15 billion euros before the end of 2019.

One third of the 20 billion euros in liquidity is cash raised from previous bond auctions, with the rest coming from public entities, state bank deposits and primary budget surpluses for 2018 and 2019, according to the officials.

Greece expects to receive 12 more billion euros from its official lenders after the conclusion of the last review of the bailout program in early summer. The biggest part of the new loan will go to the cash buffer. (Editing by Mark Bendeich and Catherine Evans)

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