Who Bought The New Greek Bonds: Here Is The Answer

After triumphantly returning to the bond market three years after it last issued a euro-denominated long bond (which one year later nearly defaulted when only a third bailout prevented Grexit), this morning Bloomberg has provided details of who the lucky buyers of the just priced €3BN bond offering were. And not surprisingly, the biggest source of new funds for the Greek government (which will then use most of this to pay interest owed to the ECB) were US buyers.

As Bloomberg notes, just under half, or €1.425BN of the €3BN deal was new money with €1.57b of existing paper rolled, with the following geographic distribution of new sources of cash:

  • U.S. 44%
  • U.K./Ireland 26%
  • Greece 14%
  • France 7%
  • Spain/Portugal/Italy 3%
  • Germany/Austria 3%
  • Others 3%

By investor type:

  • Fund managers 46%
  • Hedge funds 36%
  • Banks/private banks 13%
  • Others 5%

Meanwhile, roughly half, or €1.574BN of the existing bondholders rolled into the new issue, as follows:

  • Greece 75%
  • France 11%
  • Switzerland 6%
  • U.K./Ireland 4%
  • U.S. 3%
  • Others 1%

And by investor type:

  • Banks/private banks 74%
  • Fund managers 16%
  • Hedge funds 5%
  • Insurance 4%
  • Others 1%

But the best news of all for this new batch of mostly American investors: the bonds are already profitable: the new 5Y bonds were trading tighter one day after the country’s first sale in three years.

The spread on new Greek paper to the underlying Obl ~8bps lower, according to Bloomberg data. The bonds, which were launched at +476.7bps, are now being quoted by Greek banks at 99.32 bid, or +468.6bps as of noon London time.


Bernardo Gui Wed, 07/26/2017 - 08:41 Permalink

The market clearly expects future bailouts. As long as the ECB can print euros, there will be a market for junk sovereign debt. The same assumptions have driven the US equity market to record highs. Markets and fundamentals mean nothing. What can go wrong?

el buitre Bernardo Gui Wed, 07/26/2017 - 10:05 Permalink

Despite their new rules, the central banks will use bail-outs until they don't, at which time all bank assets will be bailed in in one yuge, sudden putsche.  Otherwise they would start a bank run before they are ready, i.e. before all paper cash is gone and people have some recourse.  Once they pull off the giant bail-in, the COMEX defaults and becomes irrelevant and PM's skyrockets.

In reply to by Bernardo Gui

back to basics Wed, 07/26/2017 - 08:41 Permalink

Easy money for these funds. The EU will demand the daily sacrifice of 12 Greek virgins (if there are any left) to hand over new loans to Greece so that they can pay these bonds when they mature instead of defaulting. To call this whole thing a farce at this time is to underestimate the extend of the sadistic hardship the Greek people are enduring all in the name of the euro.

syzygysus Wed, 07/26/2017 - 08:46 Permalink

Cosigner is Germany, of course people are buying that shit.  Kind of like a dorky barely employable kid with a minimum wage job getting a new Hummer cosigned by rich daddy.

youngman Wed, 07/26/2017 - 09:02 Permalink

Just when you think we learned from the last disaster....we do it again....bail outs are a new investment strategy.....not when I went to school...but now....its a whole new ballgame...they dont even have a ball

small axe Wed, 07/26/2017 - 09:05 Permalink

perhaps the new bondholders should go to Athens and collect their paper in person ... nah, that would make Greece's misery personal. Much better to count the profits from afar, never needing to admit your role. fucking bankers

TeaClipper Wed, 07/26/2017 - 09:26 Permalink

Pssssssst Greece, You did get the memo about Germany quietly printing deutsche marks again didnt you? Would be ironic if you clowns were the last passengers in the Euro funny car

tuetenueggel Wed, 07/26/2017 - 09:42 Permalink

Owning even the junkiest bonds of any EURO-memberstate never will be a fault. ECB will buy all of them so not a single investor takes any risk.They will be bought with freshly printed ECB Euros. at a rate of 99 % payed by Germany.Criminals from 1918 until now without any interruption are:USA, GB, France and Italy.

bankbob Wed, 07/26/2017 - 10:10 Permalink

USA hedge fund managers bought the most?  Probably for their retirement fund customers who need the higher yields.Just because something has a soverign guarantee - does not mean it is actually guaranteed. 

surf@jm Wed, 07/26/2017 - 10:42 Permalink

Well of course......Government pension fund managers in the states, can point to the Greek bond interest rate, to prove they can keep their pension funds solvent.......It will work out as well as buying a Puerto Rican bond.......

Too-Big-to-Bail (not verified) Wed, 07/26/2017 - 11:09 Permalink

Not as much risk as people think -- They'll either be bailed out by Germany, or refinanced to kick the can even further into the future.