Greece raises $3.5bn in milestone bond issue

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.