Greek authorities raise £1.3 billion in debt market
In a sign that perhaps confidence is returning to the Greek economy it was revealed that the Greek authorities raised £1.3 billion in a bond issue which was actually oversubscribed. There had been concerns that this week's bond issue would fall flat and see the government look to the EU and the IMF for financial assistance, but this has certainly not been the case as yet.
However, the Greek authorities were forced to pay a higher rate of interest on the six months and 12 months in question. This week saw the 12 month bonds issued at a rate of 4.85%, compared to just 2.2% in January, and 4.55% for the six-month bonds compared to just 1.3% in January. While this large increase in the rate of interest applicable to the bonds is alarming it was not totally unexpected when you consider the state of the Greek economy and the Greek government finances.
Whether this is actually a turning point in the Greek debacle remains to be seen as many investors still have medium to long-term concerns about the way the Greek economy has been run. It will be interesting to see as and when the authorities decide to draw down on the financial bailout announced by the EU and the IMF with many experts believing this will happen sooner rather than later.
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