Greece ended a four-year exile from international markets with a bond sale of 3 billion euros ($4.2 billion), more than the government estimated.
The coupon on the bond, which will be settled next week, is 4.75 percent, with almost 90 percent of the issue going to long- term investors outside Greece, the Athens-based Finance Ministry said in an e-mailed statement announcing the sale. The order book for the issue exceeded 20 billion euros, according to a person familiar with the matter who asked not to be identified because he isn’t authorized to speak about it. A Greek government official told reporters in Athens Wednesday that the country sought to raise 2.5 billion euros.
“Greece returns to the bond markets under the same or even better terms than Ireland and Portugal,” Greek Deputy Prime Minister Evangelos Venizelos told reporters in Athens earlier Thursday after meeting with Prime Minister Antonis Samaras.
Greece, which has been bailed out twice, carried out the world’s biggest sovereign-debt restructuring and teetered on the brink of exiting the euro, had been shut out of bond markets since March 2010 and kept afloat with aid totaling 240 billion euros from the euro area and the International Monetary Fund.
Those funds necessitated the regular presence in Athens of officials from the so-called troika of the European Commission, the European Central Bank and the IMF, which became associated with austerity measures that triggered a political and social backlash.
“We welcome this,” Poul Thomsen, the IMF’s mission chief to Greece, said Wednesday. “It’s a fundamental objective of the program to bring Greece back to market and this is an important milestone in this regard, and that clearly speaks to the success of the program.”
The return bookends a period in which Ireland and Portugal both followed Greece in seeking bailouts after being shut out of markets, with both those countries having resumed selling bonds by January 2013. In Cyprus, the fifth euro-area country to seek a bailout after Spain also got assistance for its banks in 2012, Finance Minister Haris Georgiades said this week that the country was targeting a return to markets in the second half of next year.
The yield on Greek 10-year bonds climbed five basis points, or 0.05 percentage point, to 5.94 percent at 2:24 p.m. Athens time. The rate fell 27 basis points Wednesday, and touched 5.80 percent, the least since February 2010.
Greek securities returned 33 percent in the year through Wednesday, the most among sovereign-debt markets tracked by the Bloomberg World Bond Indexes.
“I think they will come to markets again at least two times more this year,” said Michael Michaelides, a rates strategist at Royal Bank of Scotland Group Plc in London, who has raised his forecast for how much Greece will raise from markets this year to 8 billion euros from 5 billion euros. “This massively helps Greece in negotiations with the troika.”
A car bomb exploded outside one of the Bank of Greece’s offices in central Athens this morning as a reminder of the upheaval that continues to rock the country almost four years after it resorted to calling for outside aid. Police said no one was injured in the bombing.
Protests, strikes and even bombings have been regular occurrences in Greece since then. Thursday's device exploded at about 6 a.m. outside a building belonging to the Bank of Greece, causing some damage to surrounding buildings, a police spokeswoman said by phone.
Greece won approval this month from euro-area members for an 8.3 billion-euro aid payment, the first disbursement from its bailout program since December. The government and European Union predict that the Greek economy will expand 0.6 percent in 2014 after six consecutive years of contraction that has cost about a quarter of the nation’s economic output and sent the unemployment rate surging.
“The real economy is showing encouraging signs of recovery,” Greek Finance Minister Yannis Stournaras said at a conference in Athens Thursday.
Greece’s unemployment rate dropped to 26.7 percent in January from 27.2 percent in the previous month, according to data Thursday from the Athens-based Hellenic Statistical Authority.
The country still faces challenges including deflation. Consumer prices calculated using a harmonized EU method dropped 1.5 percent in March from a year earlier, the 13th straight decline. Non-performing loans ballooned to 31.7 percent of total lending at the end of 2013, according to data provided by the Bank of Greece. [Bloomberg]