Greece raises $3.5bn in mile­stone bond is­sue

Kuwait Times - - BUSINESS -

ATHENS: Greece broke a three-year dry spell with a suc­cess­ful re­turn to the debt mar­kets yes­ter­day, a sym­bolic vic­tory for the be­lea­guered eu­ro­zone na­tion. It even man­aged to bor­row at cheaper rates than in 2014, the last time it tapped the in­ter­na­tional bond mar­ket, HSBC, the lead man­ager for the op­er­a­tion, told AFP. The Greek trea­sury sold three bil­lion eu­ros ($3.5 bil­lion) worth of five-year bonds at a rate of 4.625 per­cent, said Fred­eric Gabi­zon, head of Euro­pean public sec­tor debt at HSBC. That is be­low the 4.95 per­cent in Greece’s last auc­tion of bonds in 2014, re­port­edly the tar­get the Greek gov­ern­ment had set for it­self in the new of­fer.

Over­sub­scribed

To­tal de­mand for the is­sue came in at 6.5 bil­lion eu­ros, Gabi­zon said, mak­ing it more than twice sub­scribed. Half of the bonds sold were new, and half were is­sued to be ex­changed for five-year bonds sold in 2014. Apart from HSBC, BNP Paribas, Bank of Amer­ica Mer­rill Lynch, Citi, Deutsche Bank and Gold­man Sachs also un­der­wrote the syn­di­cated sale.

The gov­ern­ment an­nounced Mon­day it was at­tempt­ing a come­back to the debt mar­kets, which it con­sid­ers a test of con­fi­dence. Greece cur­rently has no real need to draw money from the bond mar­kets as it re­cently re­ceived re­newed fi­nan­cial sup­port at lower rates un­der its in­ter­na­tional bailout that should see it through un­til next year. How­ever it is a psy­cho­log­i­cal mile­stone, demon­strat­ing that Greece is back on the road to wean­ing it­self off bailout aid. It is also an op­por­tu­nity for Prime Min­is­ter Alexis Tsipras to shore up sup­port for his Syriza party.

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