Greece Makes Its Triumphant Return To The Bond Market

Greece greek flag

Greece made its triumphant return to the bond markets today.

According to the WSJ, Greece sold 3 billion euros (or around $US4.16 billion) of 5-year bonds at an interest rate of 4.95%.

At the height of the euro crisis just a few years ago, long-term yields would sit north of 60%. Not only is this a low interest rate for Greece, it’s also pretty low considering the country debt is rated “junk,” which means it continues to be at pretty high risk of default.

is rated nine notches below investment grade at Caa3 by Moody’s. Standard and Poor’s and Fitch rank Greece six notches below investment grade at B-,” noted Reuters Helene Durand.

Demand was huge. WSJ’s Katie Martin noted around 550 accounts placed orders. Demand for the 3 billion euro bond sale was actually closer to 20 billion euros.

However, the bond sale was not without its sceptics.

“Order books for hot deals are padded to boost allocations,” said finance Twitterer Pawel Morski. “There is no €20bn of genuine end-user demand for Greece.”

“Greece has been the most conspicuous example of the dramatic improvement in sentiment towards the eurozone periphery,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy. “Markets have gone from being paranoid to complacent in a very short period of time, with the recent sell-off in developing economies playing into the hands of debt managers across the eurozone periphery.”

Crushing debt levels, soaring interest rates, and an all-out financial crisis in southern Europe kept Greece shut out of the bond market since 2010.

“Greece is back,” said Prime Minister Antonis Samaras last week.

However, it’s far too early to be celebrating. With a quarter of its workforce still unemployed, the country is only beginning to claw it’s way out of economic depression.