Investors back Greek bond issue as bailout end approaches
ATHENS, Greece (AP) — Investors bought strongly Thursday into a bond issue designed to help wean Greece off its international bailouts, in what officials see as an endorsement of efforts to right the country’s battered economy.
Officials said Greece raised about 3 billion euros ($3.7 billion) from the new seven-year bond, which has a yield of roughly 3.5 percent. Offers exceeded 7 billion euros ($8.6 billion), with up to 6 billion euros being bid in the first hour of the auction.
The Greek government hailed the issue as a major step toward restoring normal market access, which was brutally severed in 2010, necessitating three successive multi-billion euro international bailouts. The rescue loans kept Greece solvent but hinged on crippling austerity measures that wiped a quarter off its economy.
“Today’s (issue) proves not only that we can raise new funds, but that we are in a position to do so under not particularly favorable conditions,” Finance Minister Euclid Tsakalotos said.
He was referring to this week’s turmoil in global financial markets, which forced Greek officials to delay the auction two days.
The government wants to secure a full return to the markets this year, as the country’s third successive bailout, funded by other eurozone countries, ends in August. After that, Greece will no longer have recourse to the rescue loans, which carry much lower interest rates but have a high cost in terms of required spending cuts and strict external supervision of the country’s finances.
Thursday’s auction proceeds will be added to a cash cushion set aside for after the summer.
The bond issue coincided with a visit to Athens by EU Finance Commissioner Pierre Moscovici, who discussed debt relief proposals with Greek officials as well as post-bailout oversight measures.
“There is reasonable and unwavering hope that we can get out of the Greek program in good condition,” Moscovici said at a meeting with Greek President Prokopis Pavlopoulos.
The commissioner said he hoped the fourth and final review of the current bailout and post-bailout arrangements could be finalized by late June.
“There will be some important questions that I am very aware of. One would be what sort of post-program supervision will be needed, without it being an intrusion by EU officials, and one that allows the Greek (government) to manage its own growth strategy,” he said.
Greece is hoping lenders will back a French proposal to link the country’s debt repayment terms to its economic growth rate, in an effort to avoid a repeat of high repayment obligations during a recession.
“The bond issue reflects improvements in the Greek economy and a creditor commitment to come up with a debt relief plan,” John Papageorgiou, host of an Athens radio show devoted to bailout developments, told The Associated Press.
The European Commission, in forecasts Wednesday, expects the Greek economy to grow 2.5 percent in 2018 and in 2019.
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