Greek officials put on a brave face on Monday after the country’s new effort to find cheap money on capital markets with the issue of a seven-year five billion euro bond met with a lukewarm response.
The sale, the first since a EU rescue plan to save the nation from insolvency, went marginally better than an attempt this month to tap debt markets. With the bond priced at a premium of about 6.0 per cent — roughly twice the borrowing costs of Germany — analysts said it was clear Greece still had ways to go before it was out of the woods. “It was a good move to test the availability of resources but cost is still an issue,” said Yannis Stournaras who heads the Foundation for Economic and Industrial Research in Athens. “It shows that the de-acceleration of spreads will take time.”
As with previous issuances, subscriptions came in fast when the book opened. The sale drew less demand than two heavily oversubscribed Greek 10-year sales with analysts attributing the response to the bond’s shorter maturity and Easter break. The Athens stock exchange dropped by 0.49 per cent.
Athens had hoped the EU support mechanism would restore investor confidence and lower the yield on bonds even though the opaque facility has failed to greatly enthuse markets.