Markets lap up Greece’s debt issue

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Athens - Bailed-out Greece returned to bond markets with a bang yesterday, ending a four-year exclusion, raising e3 billion (R43bn) and sending a signal that the euro zone debt crisis is fading.

“A sum in the order of e3bn will probably be raised,” government spokesman Simos Kedikoglou told Athens radio To Vima, adding that the interest rate was “below 5 percent.”

The bonds have a life of five years, and this return to the medium-term debt market is a milestone for Greece, which is in recession and suffering deeply from the effects of crisis and reforms. Deputy Prime Minister Evangelos Venizelos told reporters that the sale had been “at least eight times oversubscribed” and termed the auction “a huge success.”

Reports said the operation pointed to an interest rate paid by Greece of 4.95 percent, marking another success in achieving a rate below 5 percent.

The sale is a big step in Greece’s financial resurrection after two EU/International Monetary Fund (IMF) bailouts. It was timed a day before a visit by German Chancellor Angela Merkel, and originally designed to raise e2.5bn.

Hours before the sale, a powerful car bomb exploded outside the Bank of Greece in central Athens but no one was hurt as police had time to clear the area. The debt issue came on the same day as protesters launched the first anti-austerity strike of this year.

One analyst said the appetite for the Greek bond sale had been “jaw-dropping”.

Ishaq Siddiqi, a market strategist at ETX Capital, said: “The move by Greece at first to return to the bond markets appears to be opportunistic and somewhat symbolic as the country clearly wants to be able to raise its own funds.”

The last issue of five-year bonds four years ago carried an interest rate of 6.1 percent.

The bond issue comes against a background of sharp falls in recent months in borrowing rates for other euro zone countries hit by debt problems. Italy borrowed for 12 months at a record low rate of 0.589 percent yesterday.

Athens’s move was welcomed by the IMF, which along with the EU and the European Central Bank has provided huge financial support for the stricken economy. The so-called troika first bailed out Greece in 2010 with a programme worth e110bn after Athens found itself frozen out of debt markets when it revealed its public accounts had been falsified.

The troika agreed a much tougher second rescue in 2012 worth e130bn. In return for the bailout, Greece had to institute a host of deeply unpopular reforms, including streamlining its public sector. The measures have sparked regular strikes and protests. – Sapa-AFP


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