ATHENS, Greece – Buoyant Greek officials said the government had received strong interest for its first bond issue in four years, with Thursday’s auction of five-year debt being about eight times oversubscribed — a sign of growing market confidence.
Hammered by a severe loss of credibility brought on by huge debt, the country has been locked out of the market by excessively high borrowing costs since 2010. Since then, it has depended on international bailout loans, so Thursday’s sale was a milestone for the country.
The government was initially seeking to raise 2.5 billion euros ($3.45 billion) in the sale. The final results of the auction, including the average interest rate it will pay investors, were not yet made public. But officials indicated they were far better than initially expected.
“The amount was at least eight times oversubscribed,” Deputy Prime Minister and Foreign Minister Evangelos Venizelos said after a meeting with the prime minister. The official results would be released later in the day, he said, but added that “the interest rate will be better than expected.”
“It’s a huge success,” Venizelos said.
Government spokesman Simos Kedikoglou said the country would accept about 3 billion euros of the offers and that it would pay an interest rate of just below 5 per cent, below initial estimates.
Greece has been dependent on international bailout funds for the past four years, provided on condition it imposed a series of deeply resented spending cuts and tax hikes. However, the country’s interest rates have been falling recently as its public finances have improved following tough austerity measures.
“Greece has succeeded — and this is recognized by our most critical friends and partners — in achieving an exit from the crisis, or is very close to an exit from the crisis,” Finance Minister Yannis Stournaras said during a speech at a European Union event in Athens.
The bond auction is a sign of how market confidence in the country has improved. However, ratings agencies still consider Greek bonds to be far from investment grade, rating them with junk status. The country has not committed to regular auctions of long-term debt, and still draws funds from its bailout from the International Monetary Fund and other eurozone countries.