Greece starts marketing new bond; will US investors dominate?

miércoles 9 de abril de 2014 08:36 GYT
 

By Sarka Halas

LONDON, April 9 (IFR) - Greece's announcement that it is taking indications of interest for a five-year benchmark-sized euro-denominated bond just as the US bond market opened supports widespread speculation that US investors will feature prominently in the landmark transaction.

In particular, bankers expect big US emerging market accounts to invest in the C rated sovereign, taking advantage of the likely attractive yield.

Speculation has been rife for days over the exact timing of the deal.

Now that is out of the way, there are two questions on everyone's lips: what will the price of the deal look like and who will buy it? Demand for the deal is expected to be big.

"I've heard a rumour that one bank offered to underwrite the whole thing. So you know demand is there," said one banker away from the deal. "They've done a lot of non-deal marketing in the US. Their expectation is to sell to big EM funds in the US."

The make-up of the dealer group supports this contention. There are four US investment banks out of the six lead managers: Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, and Morgan Stanley.

The deal is expected to price on Thursday, a lead manager on the deal said. Bankers speculate that leading investors such as Franklin Templeton could be prominent. Franklin was a big investor in Ireland and Greece.

Market participants said the rumour was the government was targeting a yield of less than 5% on the new bond. The current yield on Greece's 2024 bond has fallen to around 6% according to Tradeweb, and around 220bp more than 10-year Portuguese bonds. The curve between five and 10-year bonds for Portugal is 130bp.   Continuación...