June 6, 2018 / 12:56 PM / 5 months ago

No set timing on Greek bond issue plans - officials

ATHENS (Reuters) - Greece has made no decision on the definitive timing of a new bond, officials said, after Reuters reported it had pushed back debt issuance plans by a few months due to political risk in Italy.

FILE PHOTO: A Greek national flag and a European Union flag flutter under storm clouds in Athens May 28, 2015. REUTERS/Alkis Konstantinidis

Shut out of bond markets in 2010 after its debt crisis broke out, Greece has been tiptoeing back in following economic reforms carried out under the terms of its third international bailout, which is due to end in August.

Government officials told Reuters early on Wednesday that Athens had been keen on making a new issue before then, to establish continuity in the bond market.

But the market impact of political ructions in Italy meant the plan might have to wait until the autumn, when Greece hoped to have also secured further debt relief from its lenders, the officials said.

Later on Wednesday, a finance ministry official said that, to make a decision for a postponement “there must first be a decision for an issue (and)... there never was such a decision”.

Governments typically never disclose the exact timing of a bond issue beforehand.

“Of course the plan is to issue a 10-year bond at some point but you need to assess market conditions, you don’t plan two or three months ahead... So ...there was nothing to cancel,” a second government official said late on Wednesday.

The country’s debt agency, the finance ministry official said, has had a broad mandate since last summer for trial issues and has the necessary experience to decide when is the most appropriate time.

Athens has tapped bond markets twice in the past 12 months, via a five-year bond in July 2017 and a seven-year bond in February. It wants to be in a position to cover its financing needs from the markets after its bailout expires.

Euro zone financial markets were jolted last week as Italy’s two main anti-establishment parties struggled to form a government. A coalition has since been agreed, but markets remain on edge over a potential standoff over spending between it and Brussels.

The yield on 10-year Greek bonds GR10YT=RR has risen by about half a percentage point to 4.57 percent in the last two weeks. The yield on the seven-year paper issued in February has climbed around 70 basis points to 4.16 percent.

Athens faces debt repayments of about 15 billion euros before the end of 2019, with officials saying it can easily cover its financing needs by 2020 without a single bond issue, thanks partly to a cash buffer it is building up.

For the post-bailout period, Greece does not want to ask for a precautionary credit line, which usually comes with strict fiscal and reform conditionality.

Its lenders have been examining debt relief measures to kick in after its bailout ends to make its huge debt pile - now at 179 percent of GDP - sustainable.

Additional reporting by Renee Maltezou and Leigh Thomas; Editing by George Georgiopoulos and John Stonestreet

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