Greece made to pay for debt loan

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Greece managed to borrow €1.65bn (£1.5bn) on the debt markets yesterday.

But that came at a cost, as fears of a debt restructuring saw investors demand yet higher rates of interest. The yield for the three-month notes was set at 4.1 per cent, higher than the previous auction in February, when the rate was 3.85 per cent.

The spread against benchmark German 10-year bonds also widened to a new record, with investors now demanding an extra 11 percentage points to hold Greek debt. The Greek government insists it will not restructure, or impose a "haircut" – cutting the amount of debt it will repay.

But most economists, and an increasing number of politicians, are predicting such a default, with Clemens Fuest, the chairman of Germany's Finance Ministry's technical advisory, saying it was inevitable: "One must recognise the realities."