ECONOMY

Savings bonds not so popular

The government’s second issue of one-year popular savings bonds met with even less success than the first issue as retail investors bought significantly less than the previous time. A total of 48,576 applications were submitted for bonds worth 651,094,000 euros, the Public Debt Management Agency said yesterday. The subscription period ended May 23. The first offering of popular savings bonds was launched in February, with the government aiming to take in 1 billion euros. Retail investors, however, only took up about 803 million euros of the paper. This time, 800 million euros’ worth of bonds were on offer, Economy and Finance Minister Nikos Christodoulakis had announced. A similar offer was planned for August. Analysts said lack of marketing and the burdensome purchasing and settlement procedures hampered interest. «The issue was not promoted this time, unlike offerings of treasury bills,» said one analyst. Timing probably played a role, the analyst said, citing the intervening period between Easter and the start of the summer holidays which could lead to investors paying more attention to their cash in hand. «Liquidity is a problem at the moment,» said the analyst. Seeking to attract interest, the government increased the cap on purchases of popular savings bonds to 15,000 euros from 10,000 euros the previous time. The coupon remained unchanged at 3.6 percent. Investors are required to hold the paper until maturity to earn the tax-free interest or pay a 10 percent withholding tax. Popular savings bonds were dreamed up by the government to help retail investors hit by a negative yield on bank savings. Three issues had been originally planned for this year. It is not clear if the State will go ahead with the final offering following the less than satisfactory response from