The cogs have started moving in public sector debt markets after Greece reached an agreement with eurozone finance ministers this weekend for an €86bn bailout package.
While there are still some uncertainties ahead, the initial €13bn should be available to Athens by this Thursday, just ahead of a €3.188bn debt obligation to the European Central Bank due August 20.
While SSA issuers were likely to come to market in September anyway, the news will give them more confidence as they make their plans, said bankers covering the sector.
“It takes away some of the potential headline risk, and it feels like people are going to start issuing bonds as early as next week,” said one banker covering public sector debt.
The Greek debt crisis has already caused bouts of volatility in eurozone government bonds this year, part of the reason why issuance has proved challenging in the single currency.
A bailout programme would theoretically remove the risk of a Greek default for the next three years, though the funds are dependent on the country implementing various reforms.
Accordingly, eurozone government bonds were on the front foot on Monday. Ten-year Bund yields were in 3bp to a bid of 0.63%, while in the periphery 10-year Bonos were in 7bp to 1.95% by 2pm London time, according to Tradeweb.
There are still some hurdles before the bailout goes through. Various eurozone parliaments are yet to vote on the deal and Greek prime minister Alexis Tsipras could have to call a confidence vote with many MPs in his own Syriza party opposing the terms of the bailout.
Also, the German line is that IMF involvement is essential for the package to go through, and the IMF has suggested it will only get involved if there is debt relief for Greece.
“This is likely to prove a difficult process, with the IMF’s Lagarde reiterating that Greece needs debt relief in order for her to be able to recommend to the IMF’s board that the institution should take part in the bailout deal,” analysts at Rabobank said in a note.
