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The Greek Ministry of Finance has successfully replaced 3- and 6-year maturity bonds with securities maturing in 3 and 5 years. The original purpose of the operation was to replace bonds worth 1 billion euro at lower rates of return than those effective upon their issue. The proposal was accepted with great interest by investors who offered more than 1.6 billion euro.

In its communication, the Ministry of Finance determines the operation as very successful for several reasons:

Firstly, because, from very short-term bonds, the debt has been turned into securities with longer maturities, thus alleviating the pressure to refinance the public sector in a period of decline in the income from securities.

Secondly, because the number of circulating bonds has been reduced from 15 billion to 13.4 billion. This allows the issuance of bonds with 18-month maturity that will fill the gap in interest rates, focusing on investors who seek a long-term income. The issue of an 18-month bond will allow the Greek government to ensure return on 3- and 6-month bonds that constitute a larger part of the deposit product and to further reduce their value. This management method will thus provide financial benefits to Greece for a period of six months.

The third reason is that the Greek banks will have the opportunity to actively participate in the market of Greek government bonds that is attracting an increasing investor interest due to the improvement of the economy. The Ministry notes that this is an important step towards the normalization of the market since, in the rest of the European periphery, the involvement of the local financial institutions is over 30%. The participation of the Greek banks will provide the bond market with greater liquidity, making it more functional by reducing transaction costs and attracting more investors.

In parallel, the Ministry of Finance is preparing to issue next Tuesday bonds with a 3-month maturity. The settlement day is set to be Friday, 19 September, and the interest rate on the bonds will be determined on the basis of the ACT/360 calculation.

The auction will be held with competitive bids from the primary dealers in the Electronic Secondary Securities Market under the procedure laid down in the rules of their work.

In addition, the rules of the primary dealers allow the submission of non-competitive bids on the day of the auction and two days after it, until midnight on the second day. In each of these two cases, non-competitive bids are satisfied at the cut-off price, which can amount to 30% of the auction. Bonds do not provide for commission payments.