Announcement comes a day after Greece announced new austerity measures By Polya Lesova, MarketWatch FRANKFURT (MarketWatch) -- Greece said on Thursday it plans to issue a new 10-year euro-denominated bond in the near future, with the announcement coming a day after the nation decided to take additional austerity measures to lower its excessive fiscal deficit. The Greek government has hired Barclays Capital, HSBC Holdings, Nomura, National Bank of Greece and Piraeus Bank SA to manage the deal, the Public Debt Management Agency said in a statement on Thursday. "The transaction will be launched and priced in the near future subject to market conditions," the agency said. The new bond will be due on June 19, 2020. The bond issue will gauge investors' confidence in Greece and appetite for its debt. The initial spread guidance is 310 basis points over the benchmark mid-swaps rate, which represents a premium over the Greek curve of about 35 to 40 basis points, according to Luca Cazzulani, strategist at UniCredit Bank AG in Milan. The new bond would likely offer a yield of about 6.50%, Cazzulani wrote in a note to clients. "While expensive for the issuer, this yield level is about 50 basis points lower than last week," the strategist said. Greece has to repay around 20 billion euros in April and May, while it has raised around 10 billion so far this year. "Hence, an issue size of 5 billion euros would be a good result, but not enough to fully cover the near-term funding needs," Cazzulani said. The bond announcement comes after Greece announced new austerity measures on Wednesday that aim to save 4.8 billion euros, or 2% of gross domestic product, through cutting spending and raising some taxes. Those measures are in addition to previously announced measures targeting savings of 4.5% of GDP. "They signal the Greek government's determination to ensure a sustainable fiscal path and to restore confidence in the Greek economy," the finance ministry said late Wednesday, regarding the additional measures. Greece has pledged to reduce its deficit by 4 percentage points, to 8.7% of GDP, by the end of 2010. That would still leave the deficit above the euro zone's 3% limit. Greek gross public debt exceeds 113% of GDP, the second highest debt-to-GDP ratio in the European Union. The International Monetary Fund, Moody's Investors Service and the European Central Bank were among the institutions that offered praise for Greece's latest austerity plan, though they all emphasized the importance of quick implementation. In a statement, the ECB called the measures "convincing" and said they demonstrate "the strong commitment" of the government to achieve its fiscal goals. "We appreciate the envisaged very swift implementation of these measures, which are both necessary and appropriate to make significant progress with fiscal consolidation in 2010," the ECB said. "This determined fiscal and structural reform program will benefit Greek citizens by allowing the Greek economy to overcome the present difficulties," the bank said. Economists expect the ECB's governing council to leave its key lending rate unchanged at a record low 1% when it concludes its meeting in Frankfurt later on Thursday. Read more on the upcoming decision. The rate decision will be announced at 7:45 a.m. Eastern. ECB President Jean-Claude Trichet will hold his monthly news conference at 8:30 a.m. Eastern.

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