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Greece Set to Raise $3 Billion from 30-Year Bond Issue

Greece bond issue
The building of the Bank of Greece in Athens. Credit: George E. Koronaios, CC BY-SA 4.0/ Wikipedia Commons

Greece’s 30-year bond, issued on Wednesday has attracted great demand, the public debt management agency announced.

According to the announcement, the first sale of 30-year bonds since 2008 is set to to raise 2.5 billion euros ($2.99 billion).

Greece drew in more than 26 billion euros (US$31 billion) of orders for its 2.5 billion-euro sale via banks.

Bloomberg says that this shows investors’ long-term confidence and appetite for a yield at nearly 2 per cent that is the highest in the euro area.

The demand, just shy of a record set earlier this year, allowed Greece to cut pricing by 10 basis points from initial guidance.

The issue continued Greece’s return to the markets after three bailouts during the euro zone debt crisis and underlined the sharp change in sentiment since the turmoil of those years, Reuters notes.

Bond issue will help public debt

Finance Minister Christos Staikouras said that that “the issue will significantly contribute to the further improvement of the sustainability of the public debt.”

He added that “it highlights and confirms, even more emphatically than previous issues, the confidence of the international investment community to the management, potential and outlook of the Greek economy.

“It is also an additional positive step which it is expected to work as a catalyst in future credit rating upgrades of the country.”

The Greek FinMin noted that the 30-year bond issue was notable for the significant demand it raised, the low cost of borrowing and its exceptional quality.

Greek economy in better shape than feared

The Greek economy is in a better shape than had been feared, according to official data released earlier in March.

The Hellenic Statistical Authority announced better-than-expected GDP figures for 2020, with the country’s Gross Domestic Product contracting by 8.2% to 168.5 billion euros from 183.6 billion in 2019.

This compares with the government’s estimate for a 10.5% contraction, included in the 2021 budget, and the latest European Commission forecast for a 10% drop.

That figure is still worse than the eurozone average of -6.8% and the European Union average of -6.4%. However, it is better than Italy’s -8.8% and Spain’s -11.2%.

The Hellenic Statistical Authority said that Greek GDP shrank by 7.9% in the fourth quarter compared with the same period in 2019, but rose 2.7% in comparison with the third quarter of 2020.

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