Europe News

Greece Seeks Up to $10 Billion from US Investors

David Oakley in London and Kerin Hope in Athens, Financial Times

Greece will this month launch a multibillion-dollar bond in the US in its hunt for new investors, selling itself for the first time as an emerging market country as demand for its debt dwindles in Europe.

Morgan Stanley is being considered to handle the deal after Goldman Sachs’ plans to sell Greek bonds to US and Asian investors this year fell through amid rumors that the Chinese had shunned Athens’ debt.

George Papaconstantinou, Greece’s finance minister, would lead a roadshow to the US “after April 20” but in contrast with plans at the start of the year he would not travel on to Asia, one official said.

Greece is seeking $5 billion to $10 billion from US investors to help cover its May borrowing requirement of about 10 billion euros to roll over maturing debt and meet interest payments.

The issuance is Greece’s first in the US in nearly two years.

Athens is deliberately targeting emerging market investors, who only buy debt that pays high yields, as demand has dropped markedly on successive bond deals in Europe.

“Greece is looking to diversify its investor base with this issue, which means attracting emerging market funds as well as other investors,” one official said.

Greece: An Emerging Market?

Greece attracted demand of more than 25 billion euros for its first bond sale of the year in January, yet order books rose to only 6 billion for its last bond syndication at the end of last month.

As Greece’s bond yields, or borrowing costs, are much higher than those of many developing world countries such as Brazil, Mexico and Poland, and about the same as Hungary, bailed out by the International Monetary Fund last year, analysts say it makes sense for Athens to tap emerging market funds.

“Greece is an emerging market and a Balkan country, and the fact that it’s a euro zone member is not a contradiction. It’s an issue of performance, not belonging,” Nikos Mourkogiannis, a London-based economist and restructuring consultant, said.

Greece’s 10-year benchmark yields are about 6.5 per cent compared with Brazil’s at 4.9 per cent, Mexico’s at 4.8 per cent, Poland’s at 5.5 per cent and Hungary’s at 6.6 per cent.

Greece last raised money in dollars in June 2008 when it issued $1.5 billion of five-year notes.