Business
Greece set to end its bond market exile
LONDON/ATHENS – Greece, at risk of crashing out of the euro zone just two years ago, will issue its first sovereign bond in almost four years on Thursday, seeking to send a strong political and economic signal it is on the way out of its debt crisis.
International banks have been mandated to sell a benchmark five-year, euro-denominated bond under British law, with the sale to be completed “in the immediate future,” the country’s finance ministry said in a statement.
According to sources speaking to Reuters and Thomson Reuters news and information service IFR, pricing is set for Thursday. Two investors said Greece was sounding out an indicative yield of 5.25 percent to 5.5 percent.
“We aim to raise up to 2.5 billion euros on Thursday,” one government official said. “It will be a great success if the coupon is below 5.3 percent.”
The sale is an important milestone for one of Europe’s most troubled economies. The last time it sold bonds, as opposed to very short-term paper, was back in March 2010.
Greece has been since kept afloat by 218 billion euros of European Union/International Monetary Fund bailout money and about 15 billion euros of treasury bills.
Athens has no pressing funding needs but wants to test the waters for more and bigger bond sales in the future, as part of its strategy to cover all its funding needs from the market by 2016.
The sovereign has hired Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs International, HSBC, JP Morgan and Morgan Stanley to arrange the deal.
POLITICS PLAY ROLE
Athens originally planned to tap bond markets in the second half of the year, after more tangible evidence that its ongoing, six-year recession is over.
But rapidly falling bond yields and pressure to produce an economic success before the European Parliament elections in May have persuaded Prime Minister Antonis Samaras and his fragile coalition government to bring the sale forward.
In a dramatic turnaround, existing Greek 10-year bond yields dropped below 6 percent for the first time in four years on Wednesday, down from about 40 percent two years ago, when Athens imposed severe losses on private bondholders in a 130-billion euro restructuring [ID:nL6N0N132Z]
On Tuesday, foreign investors also snapped up about 80 percent of a 1.3 billion euro six-month T-bill issue.
Greece’s debt currently stands at about 320 billion euros, or 175 percent of GDP. It is rated nine notches below investment grade at Caa3 by Moody’s. Standard and Poor’s and Fitch rank Greece six notches below investment grade at B-.
But despite its size, the country’s debt is attractive to investors because its 2012 restructuring has made it sustainable for ten years, the head of euro zone rescue fund ESM Klaus Regling said on Saturday.
About 80 percent of Greece’s debt is in the hands of the European Union and the International Monetary Fund, at very low interest rates and on a long repayment schedule. Private creditors are holding just about 30 billion euros of bonds with maturities between 10 and 30 years.
The Greek opposition opposed the bond sale, accusing Samaras of acting hastily on party-political motives. “Going out to markets is one thing. Exiting the crisis is another,” said the Democratic Left party. Samaras’s ruling coalition has a parliamentary majority of just two seats.
DON’T FORGET THE JOBLESS
Public anger about the economic pain in still running high Greece, which has seen unemployment soar to nearly 28 percent and almost a quarter of whose economy was wiped out in the austerity-fuelled recession.
Labor unions staged a nationwide strike on Wednesday to protest against austerity policies imposed on the country by its foreign creditors, including Germany, whose Chancellor Angela Merkel will visit Athens this week.
“All the joy about the bond market exit shouldn’t make us forget that 1.5 million people are unemployed in Greece,” said Nikos Koutsoukis, senior official at GSEE, the country’s biggest private sector labor union.
For all the green shoots, it is too early to talk about long-term economic stability. Thousands of businesses closed across Greece last year.
But economic data released on Wednesday add to evidence that its economy is bottoming out after six years of recession that wiped out almost a quarter of its gross domestic product.
Industrial production rose in February at an annual pace of 1.7 percent, the first time the reading rose for a third consecutive month since the end of 2007.
PPC, the country’s biggest power producer is set to become later this month its first state-controlled company to issue a bond since the debt crisis erupted.
– REUTERS
Nigeria’s economic fortune is benefiting from the Middle East crisis, as the impact of capital inflows from stronger crude oil earnings has seen her foreign reserves climb to record $53.1 billion, beating the $51.04 billion year-end target.
Data available on the Central Bank of Nigeria’s (CBN) website indicated that the reserves closed at $53.1 billion on August 24, which is the highest level in almost 18 years.
Any analyses of the growth shows that the difference in reserves position places the Nigerian economy in good stead, because it can cover over 12 months import.
It is noteworthy that Nigeria’s external reserves fuel the CBN’s capacity to support the local currency and meet external obligations, have continued to rise steadily, since the face-off between the United States and Iran.
Further analysis of the data displayed by the CBN showed that the liquid portion of the external reserves stood at $52.5 billion.
Biztellers reports that Brent crude traded around $87 per barrel, within the week, well above Nigeria’s 2026 federal budget benchmark of $64.85.
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With the Middle East crisis not showing signs of abating, analysts believe the price rebound would largely bolster Nigeria’s fiscal revenues.
The line of thought is popular among those who know, because as a crude oil exporter, Nigeria will continue to earn more petrodollars, which they argue would support the domestic currency – naira’s stability, while pumping the volume of external reserves.
In its economic projections for 2026, the CBN targeted stronger oil earnings, foreign exchange market reforms and improved external capital inflows to achieve the year-end reserves projection.
According to analysts, the current reserves position reinforces the steady growth in Nigeria’s external buffers.
The founder/Chief Executive Officer of the Centre for the Promotion of Public Enterprise (CPPE), Dr Muda Yusuf, earlier hinted at a positive outlook for Nigeria’s external reserves as he does not see anything derailing the forex and fiscal reforms that have brought about stability and improvement in external reserves, as reported by The Nation.
Yusuf said: “Well, the outlook for me is positive because I don’t see anything derailing these forex reforms, fuel subsidy etc. It is these reforms that have brought about stability.”
The CBN data further showed that Nigeria’s external reserves have maintained a steady upward surge in recent months.
The reserves started June at $49.80 billion and crossed the $50 billion mark by June 5, reaching $50.12 billion.
On June 15, reserves had increased further to $50.81 billion before rising to the current position. The reserves stood at $51.9 billion on July 31, and continued.
The sustained increase reflects stronger foreign exchange inflows and improved liquidity conditions in the country’s external sector.
The CBN Governor, Olayemi Cardoso, said: “This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability.”
The CBN’s decision to clear over $7 billion unsettled FX backlogs raised investors’ confidence in the economy, supporting dollar inflows and foreign reserves accretion, Cardoso added.
The CBN boss had explained that although he had no idea where the fund for the backlog clearance would come from, when he assumed office, he believed it was the right thing to do, and gave investors his word.
He said: “Credibility is at the heart of any central bank. If you don’t have credibility, people do not trust you and they do not invest in your economy. When I took office, I made a promise we would pay the backlog, the verifiable backlog of monies that were owed by Nigeria to third parties.
“And it was, at the time, estimated at over $7 billion US dollars. And to be honest with you, I had no idea how I was going to do it, but I just felt it was not something to be negotiated.”
Cardoso explained that Nigeria needed to ensure that its integrity is maintained. Analysts believe the higher reserve level could enhance the CBN’s capacity to support exchange rate stability and meet external obligations.
Up to 30% equity in the upcoming Dangote Refinery in Kenya, has been placed on the table for East African countries, which makes about $1.5 billion worth of the planned project available to regional investors.
David Ndii, Kenyan President William Ruto’s economic adviser, disclosed this on Thursday at a capital markets forum in Nairobi, where he said Kenya would take a 10% stake while Ethiopia and Rwanda had also expressed interest.
Dangote’s planned refinery is expected to be developed in Lamu, a coastal town in southeastern Kenya, though the project was initially proposed for Tanga in Tanzania.
According to the billionaire industrialist, the decision to move the proposed location to Kenya was informed by commercial and technical considerations.
Ndii disclosed that Kenya’s proposed 10% participation would be worth approximately $500 million.
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He said the combined regional participation could amount to about $1.5 billion, with Dangote prepared to support the project if some participating countries are unable to commit as crude off-takers.
“The total for the region is about $1.5 billion,” he said. “I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop.”
The proposed regional participation would give East African countries a direct equity interest in a major energy infrastructure project while potentially securing access to refined petroleum products for participating markets.
The United Nations Geoscheme (UNG) for Africa defines Eastern Africa as comprising 18 sovereign countries, alongside two French overseas territories, meaning the proposed 30% allocation could potentially involve a broader regional investor base beyond Kenya, Ethiopia and Rwanda.
The Nigerian authorities have been called upon to focus on strengthening domestic refining capacity.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made the call in a communiqué issued at the end of the three-day PENGASSAN Energy and Labour Summit (PEALS 2026).
It stressed the need for adequate protection for refineries operating in the country.
The PENGASSAN said Nigeria must reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products by creating an environment that supports domestic refining and other value‑adding activities.
The communiqué, signed by the union President, Festus Osifo, and General Secretary, Jerry Amah, stressed the need to protect refineries, including Dangote Refinery and Waltersmith Refinery.
The association said the expansion would enable Nigeria to retain a greater share of the value generated from its petroleum resources while creating jobs, conserving foreign exchange and stimulating industrial development. PENGASSAN linked the growth to wider opportunities in petrochemicals, gas processing and other downstream activities.
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The communiqué reads in part: “The summit called for sustained policies and investments to expand Nigeria’s domestic refining capacity and reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products. The need to protect refineries (such as Dangote Refinery, Waltersmith Refinery, etc.) within Nigeria’s jurisdiction was emphasised.
“Nigeria must progressively retain more value from its petroleum resources through domestic refining, petrochemicals, gas processing and other value‑adding activities capable of generating employment, conserving foreign exchange and stimulating industrial growth.
“Ultimately, the strength of Nigeria’s oil and gas industry will not be measured merely by the resources beneath the ground, but by the projects delivered, the value created, the Nigerian capabilities developed, the decent jobs sustained and the prosperity generated for the Nigerian people.”
The association also warned that abrupt policy changes, overlapping mandates, repetitive approvals and conflicting directives increase the cost of doing business and weaken Nigeria’s competitiveness for global energy capital.
The PENGASSAN called for faster regulatory approvals, digitalised processes and clearer timelines, arguing that the effectiveness of regulation should be measured by its impact on investment, production, government revenue, job creation and national value rather than simply by the number of licences or approvals issued.
On gas, the PENGASSAN advocated an integrated approach to developing Nigeria’s more than 215 trillion cubic feet of proven reserves, including investments in processing facilities, pipelines, storage, LNG, LPG and CNG infrastructure. It said gas should be deployed more aggressively for power generation, manufacturing, transportation, fertiliser and petrochemical production.
The association also urged stronger protection of workers’ rights, occupational safety and employment during mergers, acquisitions, divestments and asset transfers, saying sustainable investment requires skilled and fairly treated workers and that increased production must not come at the expense of workers’ lives and wellbeing.
In addition, the PENGASSAN said the next phase of Nigeria’s petroleum industry must focus on execution with measurable targets and clearly assigned responsibilities to ensure policies translate into projects, production, investment and sustainable employment.
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