In the upcoming IPO of the Hellenic treasury issuing government bonds, the Greek government is waiting for a better timing to begin the auction for two reasons: by the end of the week it is expected that a rating agency will upgrade the Greek economy, thus lower interest rates it has to pay to nondholders. In 2014 the Greek government sought funding and the yield was 4.95%.
The second reason is that they would prefer to have as many foreign subscribers in the IPO, so as to assure confidence in the Greek economy by foreign investors.
To take up the book offering there are six international banks that have already been chosen. The interest rate issue was brought up by the Chairman of the central bank of Greece, saying that an interest below 4.95% would not be reasonable, since during the last five years, the average cost of borrowing has fallen from 3% to just about 0.5%. Thus this would be an expensive borrowing.
The government is anxious to reach the bond markets so as to regain confidence and avoid another memorandum in 2018.
Another reason the Chairman of the raises doubts is that there must be a continuity after the IPO bond financing, in terms of investments and privatizations. So far there have only been three.
