March 4, 2019 / 10:45 AM / 21 days ago

UPDATE 2-Encouraged by upgrade, Greece plans 10-year bond issue

(Adds banker, more details)

By Lefteris Papadimas and Abhinav Ramnarayan

ATHENS, March 4 (Reuters) - Greece plans to issue a 10-year bond this week after Moody’s raised its rating by two notches, sending yields on existing debt to a 12-year low.

This week’s issue will be the second debt sale since Greece exited its third international bailout in August and the first 10-year bond in a decade. The state was expected to seek about 2 billion euros ($2.27 billion) in a 10-year bond offering.

Bankers said they expected the issue to get a reception similar to that of five-year bond issued last month, when 2.5 billion euros of debt on offer was four times oversubscribed.

“Judging by the experience on the five-year, this should go well even if the tenor is a bit more tricky,” said a senior banker who works for one of Greece’s primary dealers. “They haven’t done a 10-year for a long time, certainly not since the debt crisis.”

In a regulatory filing, Greece said it has mandated six international banks as joint lead managers for the issue of a benchmark 10-year bond “in the near future”, subject to market conditions.

The banks are BNP Paribas, Citi, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.

Greece’s 10-year bond yield dropped to 3.622 percent in early trade on Monday, the lowest since January 2006.

Athens wants to return to regular borrowing through the bond markets after depending on its creditors for nearly 10 years.

It has built a cash buffer of more than 27 billion euros with money raised from markets and unused bailout loans, enough to repay about 12 billion euros in loans due this year and stay afloat up to 2021.

Greece is rated BB- by Fitch, B+ by S&P and B1 by Moody’s.

$=0.8821 euros Reporting by Lefteris Papadimas in Athens and Abhinav Ramnarayan in London, additional reporting by George Georgiopoulos, editing by Larry King

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