Greece raises 1.5 bln euros from a 7-year bond reopening at higher cost

ATHENS, April 27 (Reuters) - Greece raised 1.5 billion euros on Wednesday from the reopening of a 7-year bond, at a higher cost compared to the original issue given the sharp rise in euro area borrowing yields recently.

The final pricing of the transaction was set at +110 basis points over mid-swaps, resulting in a yield of about 2.39%, versus a yield of 2.04% in 2020, when Greece first sold the bond which is due in April 2027.

The deal is Greece's first issuance since the European Central Bank terminated its pandemic bond buying programme (PEPP) at the end of March. The ECB had purchased a substantial share of outstanding Greek bonds under PEPP, but the bonds are not eligible for the ECB's mainstream bond purchases as they are rated below investment-grade.

"It's normal with the inflation expectations and the prospect of higher interest rates from the European Central Bank," said Kostas Boukas, director of asset management at Beta Securities in Athens.

The bond attracted bids worth 4.8 billion euros, the debt agency said in a bourse filing, down from 5.8 billion euros earlier in the sale.

S&P Global Ratings on Friday raised Greece's long-term sovereign credit rating to BB+ from BB, one notch below the investment grade, citing improved policy effectiveness.

Greece plans to borrow up to 12 billion euros this year and issue its first green bond, focusing on a continuous presence in international debt markets accompanied by a reduction of its debt, estimated at 189.6% of GDP in 2022.

It raised 3 billion euros in January when it issued a new 10-year bond. (Reporting by Lefteris Papadimas and Yoruk Bahceli; Editing by Hugh Lawson and Jonathan Oatis)