Greece reveals plans to sell more bonds
GREECE said yesterday it will sell more bonds in February, emboldened after its first debt issue of the year was heavily oversubscribed, but the high price will raise pressure for unpopular spending cuts.
Strong uptake for Monday’s €8bn (£7bn) bond soothed immediate concerns about Athens’ ability to finance itself in the short term, despite market scepticism of its plan to slash its huge budget deficit over the next three years.
But the decision to issue another bond next month could prove costly as the returns now demanded by investors to hold Greek debt are hefty.
“The increase in the cost of borrowing worries me because an increase of 50 basis points means an increase of about €250m to €300m for Greece,” said Gikas Hardouvelis, an economist at EFG Eurobank.
The head of the Greek public debt management agency, Spyros Papanicolaou, said the country planned a 10-year bond in February, of up to €5bn. “The final amount will be determined by the market response,” he said.
The Socialist government was heartened by investor demand for the bond sold on Monday.