Greece mounts a successful return to bond market

Economics Editor

Greece made an impressive return to the global capital markets after a four-year absence yesterday, with Athens raising €3bn (£2.5bn) in an offering of five-year bonds at a surprisingly low interest rate of 4.95 per cent.

It is a remarkable turnaround for a country that was shut out of the bond markets in March 2010 and had to be rescued by its eurozone neighbours and the International Monetary Fund. As recently as 2012 Greece seemed to be on the verge of crashing out of the single currency as plummeting demand, soaring unemployment and political turmoil gripped the country. Greek 10-year bond yields hit a peak of 36 per cent in December of that year as investors priced in a default.

Despite Greece's private bond holders suffering an enforced haircut in 2012 Athen's bond yields have since fallen back dramatically, along with the borrowing costs of the rest of the eurozone's strugglers, and were trading at about 5.9 per cent yesterday.

Greek politicians hailed the successful bond auction yesterday as a sign its shattered economy is finally returning to health. "Today, Greece took one more decisive step to exit the crisis," Antonis Samaras, the Prime Minister, said in a televised address. "Confidence in our country was confirmed by the most objective judge – the markets."

The IMF also praised the auction. "We welcome this," said Poul Thomsen, the Fund's mission chief in Greece. "It's a fundamental objective of the programme to bring Greece back to market and this is an important milestone in this regard that clearly speaks to the success of the programme."

The Athens government achieved a primary budget surplus in 2013 and the government has squeezed down the current account deficit, which hit 17 per cent in 2007, to 2 per cent. However, this has been achieved by crushing demand in the economy. GDP has contracted 23 per cent since 2008 and has still not returned to growth. Unemployment remains at 27 per cent. Athens' government debt is 177 per cent of GDP, still regarded by many analysts as unsustainable. And in a reflection of the continuing political tension in Greece a car bomb was set off yesterday morning outside one of the central banks' offices in Athens, although no one was injured in the explosion.

The bond offer was oversubscribed, attracting bids exceeding €20bn from more than 550 investors; 85 per cent of Greek debt is in the hands of the EU and the IMF while private creditors hold the balance.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future