MNI: Greece Mulling Further FRN Sale In 2022 - Debt Chief

Athens is considering another floating rate note issue by the end of the year despite a cut in its annual borrowing target, Dimitris Tsakonas, director general at the Public Debt Management Agency told MNI in an interview in which he also predicted positive GDP and debt surprises.

Greece previously signaled its intention to raise EUR 12 billion this year from capital markets but looks likely to undershoot that target. Having already raised EUR 7 billion in 2022 through two syndicated bond sales, auctions and a floating rate note, the debt agency is mulling another sale that will potentially take issuance up to EUR 10 billion in total, Tsakonas said.

A floating rate note similar to the June launch would be a "very attractive security in upcoming months, although it will not be the main tool of our funding strategy, but complementary to it,” Tsakonas said.

“It's a wait and see position. But the reopening of this bond could facilitate the Hellenic Republic to cover its future financing needs without running any interest rate exposure, given the outstanding derivatives portfolio,” he added.

REVENUES BEAT EXPECTATIONS

Debt management offices across the euro zone are behind the curve as far as their funding strategy targets and issuance amounts are concerned, Tsakonas said, leading to a probable “traffic jam” of issuance in Q4.

However, better-than-expected revenues mean Athens has cash reserves of more than EUR 37 billion even after making additional public support payments resulting from the energy crisis, interest rate payments, amortisations and the repayment of IMF loans, he said.

Real GDP growth is officially estimated at 3.1% for the year, with inflation at close to 4.5%. However, Tsakonas said he was “pretty confident” growth will be closer to 5%, but with a higher-than-expected inflation rate. The debt-to-GDP ratio will also be much lower than the initial conservative assumption of 180%, Tsakonas said.

“Most probably we will have a positive surprise regarding debt-to-GDP levels for this year, and perhaps also a positive surprise regarding the primary deficit,” he said.

“The key target for me, and the mission that should be accomplished next year, is first of all to turn from a primary deficit to primary surpluses, in order to provide additional confidence for the ratings agency (to) give us extra notches. The target for this year was EUR 355 billion. Most probably we’ll be in compliance with this target.”