ECONOMY

Popular bonds on offer

Greece yesterday announced a second issue of one-year popular savings bonds for the public with a higher ceiling but declined to set the size of the offering. The bonds will be open to the public for subscription between May 19 and 23, the Public Debt Management Agency said yesterday. Investors can purchase up to 15,000 euros’ worth of bonds, compared with 10,000 euros in the first issue launched in February. The coupon is 3.6 percent, unchanged from the first offering. The size of the offering will be determined at the end of the subscription period. The decision to increase the cap on individual purchases could spur demand for the bonds, helping to offset drawbacks, such as the complicated procedures involved and the requirement on holding the paper to maturity to earn the full interest, said an analyst. «In the previous offering, the 10,000-euro cap limited interest, so it was not so successful,» he said. Interest this time is expected to be better, especially after the recent round of savings interest-rate cuts following the European Central Bank’s decision to pare its refinancing rate in March. With inflation seen as easing in the coming months, the 3.6 percent interest rate should prove to be a strong drawing card. The first issue of popular savings bonds, an ambitious 1 billion euros, resulted in an 80 percent take-up rate. The offering was expected to be one of three planned for this year, with the government marketing the paper as a favorable investment with an above-market yield for investors facing a negative yield on bank deposits. Investors, however, need to hold the paper to maturity to earn the full interest or face a 10 percent withholding tax. The bonds can be purchased at banks, post office savings banks and stock brokerages.