Bond issue seen as success under the circumstances

State draws 1.5 bln euros with a 3.5 pct rate via three-year paper By Sotiris Nikas

The Greek state raised 1.5 billion euros with an interest rate of 3.5 percent through Thursday’s three-year bond issue.

It may have failed to raise the desired amount of between 2 and 3 billion euros, but the government was determined to proceed with a new bond issue, albeit smaller than its previous outing, rather than shy away due to the unrest that started in Portugal and spread quickly across the eurozone on Thursday.

“Our objective was not about the amount we would raise, but rather the fact that we can get it in spite of the adverse conditions and at the right interest rate,” a top Finance Ministry official said on Thursday. He went on to describe the issue’s result as positive given the “sense of insecurity among investors” and “despite the exceptionally adverse atmosphere formed over the last couple of days in international markets, especially in the periphery of the eurozone,” as the official ministry statement said. This insecurity was generated by Banco Espirito Santo of Portugal forfeiting on its short-term debt obligations.

Notably, several enterprises, including Spain’s Banco Popular, decided to postpone bond issues on Thursday fearing the reaction of investors, as reflected in the secondary market prices of previous Greek bonds: The yield of the five-year bond rose to 4.35 percent from 4.15 percent on Wednesday, while that of the benchmark 10-year paper climbed 30 basis points.

According to a senior ministry official, the heads of the creditors’ missions to Greece “considered it a great success that the country entered the markets and drew funds” under the current circumstances.

The ministry’s next moves regarding the country’s presence in the markets include the issue of 18-month treasury bills, while it may also open another book for the three-year bonds. That would not be possible had Thursday’s issue not taken place.