Athens Bomb Fails To Dent Greek Bond Sale

Written By Unknown on Kamis, 10 April 2014 | 23.31

Greece has tapped the bond markets for the first time since its bailout in 2010, as deep anger remains over severe austerity in the debt-ridden nation.

A bomb blast outside a Bank of Greece building preceded the debt sale.

The device detonated in a car before dawn but there were no injuries and it was unclear whether the attack was related to the sale of the five-year bonds, which raised a better-than-initially-expected €3bn and marked a milestone in its return from financial rescue.

The Greek deputy prime minister Evangelos Venizelos said it was over eight-times oversubscribed.

Greek Bonds 10 Year Source: Reuters

He described the sale as a "huge success" while the managing director of the International Monetary Fund (IMF) Christine Lagarde saw it as "an indication that Greece is heading in the right direction."

The yield - the effective interest rate - was confirmed at 4.95%, lower than fellow bailout nation Ireland's 5.9% five-year yield on its market return in July 2012.

The bombing followed a 24-hour public sector strike in Greece - the latest protest in a string of often violent demonstrations against the continuing austerity demanded of it by its international bailout lenders, including the IMF.

Greek Labour Unions Hold Nationwide Strike In Protest Against Austerity Measures The latest anti-austerity protests were held in Athens on Wednesday

German chancellor Angela Merkel - a hate figure among unions in Greece because of her demands for deeper spending cuts in the country - is due in the Greek capital for talks on Friday.

Despite Greek bonds being rated as 'junk' by major ratings agencies, the success of the sale followed a steep decline in the country's borrowing costs from the darkest days of the eurozone crisis.

It marked progress in the Greek recovery programme but analysts also pointed to growing investor demand for riskier credits after the  latest US Federal Reserve minutes confirmed little pressure for a rise in interest rates before mid-2015.

Ishaq Siddiqi, market strategist at ETX Capital, said the sale marked the start of an uphill battle to regain credibility.

"The move by Greece at first to return to the bond markets appears to be opportunistic and somewhat symbolic as the country clearly wants to be able to raise its own funds to reduce its dependency on the Troika (its international creditors).

"Progress is slowly being made in the country's economy, but I stress, very slowly with the country mostly being helped out by the wider-recovery in the euro zone which is filtering in.

"Greece still has a debt/GDP ratio somewhere around 170%, still much higher than the IMF's (International Monetary Fund's) target of 120% for the country and, of course, the stubbornly high and frightening unemployment rate of 27.5% - the highest in the euro zone. 


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