Greece borrows €1.6bn from private investors
Published 15/06/2011 | 05:00
DESPITE the latest Greek debt crisis the Greek government borrowed €1.625bn from private-sector investors yesterday.
Greece, Spain and Italy all had to pay higher prices to borrow in the markets yesterday on fears the latest crisis could spread.
Greece sold debt that is due to be repaid in just six months at an interest rate, or yield, of 4.96pc. It's higher than the country paid for a similar deal last month, but less than many expected after the country's credit rating was cut less than a day before the sale.
Demand for the debt was lower than in previous offers, and just 37pc of the debt went to investors outside Greece.
Analysts said the bulk of demand came from Greek institutions rolling over their exposure to government debt rather than fresh investment.
Borrowing costs for Spain and Italy rose as those countries sold bonds yesterday, raising fears that the debt crisis could start to spread from Greece, Ireland and Portugal, if uncertainty over Greece persists.
Spain sold €5.4bn of 12-month and 18-month government bonds yesterday. The country is paying 2.695pc to borrow over 12 months compared to 2.546pc in May.
The cost of borrowing over 18 months rose from 3.095pc to 3.26pc. Italy paid 3.9pc to borrow €3.5bn over five years, up from 3.77pc for its last deal.
Unsurprisingly the market for government bonds was weak yesterday, ahead of last night's emergency meeting of euro area finance ministers.
The yield on Greek 10-year bonds hit a record 17.145pc yesterday, Irish 10-year bonds were also at a new high of 11.15pc and Portugal's benchmark government bonds were 10.46pc.