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Friday 24 March 2017

Greek bonds rise again as appetite for debt returns

Greek Prime Minister George Papandreou needs to raise €11.6bn by the end of May to cover maturing debt. Photo: Getty Images
Greek Prime Minister George Papandreou needs to raise €11.6bn by the end of May to cover maturing debt. Photo: Getty Images

Matthew Brown

GREEK bonds rose for a third day yesterday as the government sold more treasury bills than it initially planned, signalling improving appetite for the government's debt.

The advance pushed the yield on the two-year note down to close to the lowest in a week. The yield dropped the most on record on Monday following the announcement of a European Union-led agreement to provide €45bn of aid to Greece.

The government sold €1.56bn of 26- and 52-week bills yesterday morning in its first debt offering since winning the rescue pledge. The Greek equivalent of the NTMA said last week that it planned to sell a combined €1.2bn of bills.

"The sale went swimmingly well," said Marc Ostwald, a strategist at Monument Securities in London. "Greek bonds are a little firmer, but this isn't the big test of demand for Greek debt. That is likely to be the dollar sale later this month."

Prime Minister George Papandreou needs to raise €11.6bn by the end of May to cover maturing debt, with another €20bn required by year-end to pay interest and finance this year's deficit.



Shortfall

Debt chief Petros Christodoulou said two weeks ago that Greece planned to sell a global dollar bond by early May.

Last week, the government estimated its 2009 shortfall to be 12.9pc of gross domestic product, the biggest in the euro's history and more than four times the EU's 3pc limit. The previous forecast was 12.7pc.

Yields on Greek bonds rose last week as confidence in the nation's assets withered.

The extra yield investors demand to hold the country's 10-year bonds instead of German bunds, the region's benchmark government securities, climbed to 442 basis points on April 8, the highest since 1998.

The Greek-German spread averaged about 65 basis points in the five years through November, before concern deepened that the nation's deficit would soar.

Irish Independent

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