Greece raises €1.5bn at record-low yield

October 09, 2019

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ATHENS: Greece, which has needed three international bailouts this decade, on Tuesday made its second bond sale at record-low yields since July, the prime minister said, raising 1.5 billion euros at 1.5 per cent.

“The historically low yield of 1.5pc for Greece’s 10-year bond is yet another vote of confidence in the country’s economy and strong growth prospects,” Prime Minister Kyriakos Mitsotakis said in a tweet. Athens raised 2.5 billion euros in a seven-year bond placement in July at 1.9pc, which was then a record-low yield in a primary auction. At the previous auction of 10-year bonds in March the yield was 3.9pc.

The yield, or the rate of return, on Greek 10-year government bonds spiked to over 40pc on the secondary market at one point as investors demanded high returns to hold the highly risky debt.

The 1.5pc yield puts Greek 10-year bonds at roughly the same level as 10-year US government bonds, which were trading at 1.522pc on secondary markets on Tuesday.

As Greece’s economy has begun to rebound and the government has kept its finances in check, the country’s borrowing costs have fallen, although they remain far above those for its eurozone counterparts.

Both Germany and France are able to borrow at negative yields, while the yields on Italy’s 10-year bonds is roughly 0.84pc.

Published in Dawn, October 9th, 2019