By Matthew Brown and David Tweed March 31 (Bloomberg) -- Greece plans to sell a global bond in dollars in the next two months as part of a plan to raise 11.6 billion euros ($15.6 billion) in funding by the end of May after investors lost money on its most recent sale. Greece needs to borrow a total of 32 billion euros this year, including May’s amount, Petros Christodoulou, director general of the Public Debt Management Agency, said today in a Bloomberg Television interview. He declined to say how big the dollar issue might be. Greece last sold dollar bonds in June 2008 when it issued $1.5 billion of five-year notes. Seven-year notes sold by the government this week fell even after the European Union and the International Monetary Fund crafted an aid package that would be triggered should the nation be unable to raise sufficient cash from capital markets to cover its financing needs. Greece may pay about 13 billion euros more in interest over the lifetime of the debt it sells this year than it would have to had yields stayed at their pre-crisis levels relative to Germany’s, according to Bloomberg calculations, using data provided by Credit Agricole Corporate and Investment Bank. “A dollar bond sale means that they don’t have to go to the long end of the curve, which they might find tricky, after they’ve sold” five-, seven- and 10-year debt this year, said Charles Diebel, senior fixed-income strategist at Nomura International Plc in London. “They may raise 7 billion euros in a three-year deal, leaving them 4 billion euros to raise in dollars to complete their May funding.” Spread Widening Greek bonds fell for a third day, pushing the yield on the two-year note up 19 basis points to 5.24 percent as of 3:55 p.m. in London. The extra yield, or spread, that investors demand to hold Greek 10-year bonds instead of benchmark German bunds widened 10 basis points to 343 basis points. The seven-year notes have fallen 2.04, or 20.4 euros per 1,000-euro face amount, to 97.39 since the sale on March 29, according to Royal Bank of Scotland Group Plc prices on Bloomberg. The notes yield 6.37 percent, compared with 6 percent when the debt was issued on March 29, RBS prices show. “We are doing everything we can from our end to calm the markets down,” Christodoulou said. “We are doing the best we can to fund early, to reduce the uncertainty surrounding our market.” Christodoulou said he wants the nation’s 10-year bonds to yield about 250 basis points over Germany by the end of European summer and a “low 200” basis-point spread to bunds by the fourth quarter. Debt ‘Snowball’ Interest on the three bonds it sold this year, including a seven-year note offered this week, will amount to 7.7 billion euros over the life of the securities, compared with 3.8 billion euros had they sold them at the average extra spread over German debt that prevailed between 2000 and 2008, the data show. Greece will incur a further 18.9 billion euros of interest on this year’s remaining issuance, compared with 9.4 billion euros before the crisis began, according to Bloomberg calculations based on Credit Agricole data. “Greece needs to get through its current funding and start growing at a decent rate so this large amount of debt doesn’t snowball,” said Peter Chatwell, a fixed-income strategist at Credit Agricole CIB in London. “The market is currently reflecting disappointment that the seven-year deal didn’t outperform.” ‘Muddle Through’ Greece is scheduled to pay an 8.2 billion-euro redemption on April 20, an 8.1 billion-euro redemption on May 19 and will repay investors 355 million euros on May 31, according to Bloomberg data. Greece sold 8 billion euros of five-year notes on Jan. 25 to yield 3.81 percentage points more than benchmark German securities of similar maturity, compared with an average spread of 0.26 percentage points before the crisis. It issued 5 billion euros of 10-year bonds yielding 3.25 percentage points more than German debt on March 4, compared with an average 0.34 percentage point. Credit Agricole predicts that this year Greece will sell 8 billion euros of five-year notes, 4 billion euros of 15-year bonds, 8 billion euros of 10-year securities, 3 billion euros of 30-year bonds and 5 billion euros of five-year floating notes. “We are continuing to muddle our way through the funding hump that Greece has over the next few weeks,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to clients yesterday. “This story will run and run as these levels of funding relative to core Europe aren’t really sustainable.” To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

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