14 Apr 2010

Greek bond issue over-subscribed

6:07 am on 14 April 2010

Greece has raised 1.56 billion euros ($US2 billion) in an over-subscribed bond issue.

The issue is Greece's first debt sale since an agreement by eurozone countries on Sunday to provide Athens with a financial safety net if it defaults.

However, Greece had to agree to pay a higher rate of return to investors to get the latest bond issue away.

The yield on 12-month bonds was 4.85% and 4.55% on 6-month notes.

This compares with a yield of 2.2% paid on 12-month bills and 1.38% on 6-month bonds, in an issue it made in January.

Greece originally sought to raise 1.2 billion euros from the issue.

The BBC reports Greece must raise about 11 billion euros by the end of May to refinance maturing debt and interest charges. Its overall 2010 borrowing need is 53 billion euros.

However, Greece is soon to raise another 10 billion euros via longer-term bills, which will test investors' appetite for locking in their money for a longer period. Another 10 billion euros in longer-term bills is needed soon.

On Sunday, eurozone countries and the International Monetary Fund agreed to a 30 billion euro standby aid package that Greece can call upon should its financial crisis worsen.