The Greek government has had a successful issue of a new seven year government bond with a yield of 5.9%. The issue has raised its €5bn target which the government will probably use for servicing interest payments on its debt.
The yield was lower than the 6.3% offered on their ten year bond which the Greek government issued at the start of the month. However, the rate difference is probably due to the fact that longer bond terms attract higher yield, in general.
The fact that the Eurozone group of nations has just agreed a €22bn safety net for Greece, should she be unable to raise capital through the markets, will also not have hurt.
A successful government bond issue shows that the market has confidence that the government in question will be able to honour its debts when the bond falls due. Doubts about the Greek ability to meet their obligation would have meant that a higher, more attractive yield needed to be offered to compensate investors for their higher risk.
The fact that both bond issues have raised their targets perhaps indicates that market jitters over the Greek debt situation are beginning to subside. Demand for the second bond issue was not as strong as for the initial issue, but this could be linked to declining market activity in the run-up to the forthcoming Easter break.
In the wake of the announcement of the Eurozone emergency plan for Greece, the Euro has strengthened against the other major currencies. It rose by 0.7% on Friday and ended yesterday’s trading session up by a further 0.26% to close with €1 buying $1.3445. It remains to be seen if the pressure on the Euro has finished for the time being.
The yield was lower than the 6.3% offered on their ten year bond which the Greek government issued at the start of the month. However, the rate difference is probably due to the fact that longer bond terms attract higher yield, in general.
The fact that the Eurozone group of nations has just agreed a €22bn safety net for Greece, should she be unable to raise capital through the markets, will also not have hurt.
A successful government bond issue shows that the market has confidence that the government in question will be able to honour its debts when the bond falls due. Doubts about the Greek ability to meet their obligation would have meant that a higher, more attractive yield needed to be offered to compensate investors for their higher risk.
The fact that both bond issues have raised their targets perhaps indicates that market jitters over the Greek debt situation are beginning to subside. Demand for the second bond issue was not as strong as for the initial issue, but this could be linked to declining market activity in the run-up to the forthcoming Easter break.
In the wake of the announcement of the Eurozone emergency plan for Greece, the Euro has strengthened against the other major currencies. It rose by 0.7% on Friday and ended yesterday’s trading session up by a further 0.26% to close with €1 buying $1.3445. It remains to be seen if the pressure on the Euro has finished for the time being.