This year is shaping up as one of new beginnings in the sovereign debt markets. Last month, Argentina made its triumphant return to borrowing after a self-imposed 14-year hiatus. Tomorrow, Greece will test the waters after a less-self-imposed three year absence.
Of course, Greece doesn’t have quite the confidence (or cojones) shown by the Argentines, who sold off $2.75 billion in 100-year bonds, even though the country has averaged a sovereign default once every 16 years, 8 months. It will be settling for five-year notes, since—unlike in Argentina, where President Not Cristina Kirchner has fixed everything—Greece still has a few problems, notably the fact that everyone except Angela Merkel thinks it can’t actually pay all of the debt it already has. Still, there’s no time like the present.
It’s “perfect timing,” said Lutz Roehmeyer, who helps oversee 12 billion euros at Landesbank Berlin Investment GmbH. “It is after getting bailout money, after getting the go ahead for a debt reduction next year, after IMF said it is likely to join the bailout finally, after S&P rating action and still before ECB ends QE and started raising rates.” Roehmeyer already holds Greek bonds and plans to take part in the new issue….
“They’ve been doing well,” said Mohit Kumar, head of interest rates strategy at Credit Agricole CIB. “Psychologically, yields are below levels when they last came to the market. And it’s a good time to issue because if ECB starts tapering post summer, peripherals would come under pressure.”