The Hellenic Fiscal Council in its Spring Report warns that the increase in borrowing costs of the Greek State may pose a risk to debt sustainability.
The increase in borrowing costs for the Greek State since the beginning of the year, recorded today’s reissue of the 10-year bond. The final yield of the title was set at 3.67%, from 1.836% in its original release in January.
The Hellenic Fiscal Council in its Spring Report warns that the increase in the borrowing costs of the Greek State may pose a risk to the sustainability of the debt. This fact underlines the importance of further upgrading the Greek bonds to investment grade, as through the strengthening of their durability they will be accepted as a guarantee for all Eurosystem financing operations by the ECB.
Since the beginning of 2022 – after the successful reissuance of the 10-year bond – a total of €5.3 billion has been raised through the issuance by the Greek State of a ten-year bond with an interest rate of 1.83% and the reissue of a seven-year bond with an interest rate of 2.37 %.
The offers amounted to 1.934 billion euros, while ODDIX raised funds of 500 million euros and the issue was oversubscribed by 3.87 times. It is recalled that in the initial issuance of the bond the Greek State had raised 3 billion euros. The purpose of the re-issuance, according to the ODDIX, is to provide additional liquidity to the specific bond issue.
In this regard, the Fiscal Council states in the same report that despite the ECB’s support during the pandemic and the inclusion of Greek bonds in the PEPP program, the termination of the program in March, despite the assurances for the continuation of Greece’s liquidity support from the ECB, increases the asymmetry in the assessment of the risks of the Greek economy on the part of the markets, as long as the Greek economy lacks an investment grade.
Anyway prices of almost all eurozone bonds came under pressure today, causing their yields to move upwards, due to the large retreat of the euro, which is approaching 1:1 parity against the dollar. In HDAT, transactions of 254 million euros were recorded, of which 138 million euros related to purchase orders. The yield on the 10-year bond stood at 3.68%, up from 3.44% that closed on Friday, versus 1.23% for the corresponding German bond, bringing the spread to 2.45%.
In the foreign exchange market, the euro is moving lower against the dollar, returning to the levels of 2002. In the early afternoon, the European currency was trading at $1.00065 from the level of $1.0183 that opened the market. The indicative price for the euro/dollar exchange rate announced by the ECB was set at $1.0098.
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