Greece bounces back to bond market with 3bn debt sale

Bailed-out Greece returned to bond markets with a bang on Thursday ending a four-year exclusion, raising 3.0 billion euros and sending a major signal that the eurozone debt crisis is fading. "A sum in the order of 3.0 billion ($4.1 billion) euros will probably be raised," government spokesman Simos Kedikoglou told To Vima radio, adding that the interest rate was "below 5.0 percent." The bonds have a life of five years, and this return to the medium-term debt market is a milestone for Greece which is in recession and suffering deeply from the effects of crisis and reforms. Deputy Prime Minister Evangelos Venizelos told reporters that the sale had been "at least eight times oversubscribed" and termed the sale "a huge success." Reports and analysts said the operation pointed to an interest rate paid by Greece of 4.95 percent, which would mark another success in achieving a rate below 5.0 percent. The sale is a big step in Greece's financial resurrection after two EU-IMF bailouts. It was timed a day before a scheduled visit by German Chancellor Angela Merkel, and originally designed to raise 2.5 billion euros ($3.6 billion). Hours before the sale, a powerful car bomb exploded outside the Bank of Greece in central Athens but nobody was hurt as police had time to clear the area. One analyst said the appetite for the Greek sale had been "jaw-dropping." Ishaq Siddiqi, a market strategist at ETX Capital said: "The move by Greece at first to return to the bond markets appears to be opportunistic and somewhat symbolic as the country clearly wants to be able to raise its own funds." The last issue of five-year bonds four years ago carried an interest rate of 6.1 percent. Athens' move was welcomed by the International Monetary Fund, which along with the European Union and the European Central Bank, has provided huge financial support for the stricken economy. The bond issue comes against a background of sharp falls in recent months in borrowing rates for other eurozone countries hit by debt problems, and on Thursday Italy borrowed for 12 months at a record low rate of 0.589 percent. - Car bomb blast - The government condemned the car bomb attack, with state spokesman Simos Kedikoglou telling Skai Radio: "The terrorists aim to change the agenda. We will not allow that." The vehicle, a stolen Nissan packed with 75 kilograms (165 pounds) of explosives, blew up around 0255 GMT as it was parked on the pavement facing a central bank building near headquarters, police said. Internet news website Zougla and the Efymerida ton Syndakton newspaper were informed of the planned attack by telephone one hour beforehand. Athens found itself frozen out of debt markets in 2010 after it revealed its public accounts had been falsified, and was forced to seek a bailout from the European Union and International Monetary Fund (IMF) to avoid defaulting. In return for the bailout funds, Greece has had to institute a host of deeply unpopular reforms including streamlining its bloated public sector. The measures have sparked regular strikes and protests in a country suffering a sixth straight year of recession and with a 28-percent unemployment rate. - Bond issue follows protests - The announcement of the return to debt markets came on the same day as protesters launched the first anti-austerity strike of 2014, following five general strikes the previous year. The strike shut ferry services to the country's world-famous islands, disrupted air travel and closed pharmacies and government offices. The so-called "troika" of the European Union, the European Central Bank and the IMF first bailed out Greece in 2010 with a programme worth 110 billion euros. When that failed to stabilise the economy, they agreed a much tougher second rescue in 2012 worth 130 billion euros, plus a private-sector debt write-off of more than 100 billion euros. Fiscal reform under EU-IMF tutelage has brought upgrades to Greece's debt standing by ratings agencies in recent months -- but Greek bonds still carry junk status.