![Previous hedges by PDMA paying off for Greek state’s borrowing needs](https://www.ot.gr/wp-content/uploads/2021/06/3152-COVID-19-Greece-Economy-.jpg)
Actions to hedge against rising interest rates by Greece’s Public Debt Management Agency (PDMA) over previous years ultimately allowed the Greek state to recently borrow 41-percent lower than the current market rate for 10-year bonds.
Specifically, the Greek state made its first foray into the markets last Tuesday for 2023 with the issue of a 10-year bond, as strong demand was reflected in the over-subscription of the issue by 6.26 times. Offers exceeded 21.9 billion euros, with the country eventually draining 3.5 billion euros from the markets, reportedly meeting half of its borrowing needs for 2023.
A 4.25-percent annual coupon that the Greek state will pay to the 230 investors who participated in the issue will, however, have a lower real cost, around 2.5 percent, since the remaining 1.75 percent is covered by risk-hedging actions that were taken in previous years, as loans dating to the first memorandum bailout of 53 billion euros that were “discarded” through swaps mean that for every 1-percent increase in borrowing costs, Greece would obtain (if it subscribed) a profit of 4.5 billion euros
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