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Greece to issue more bonds after sale success: official

Update: April, 14/2014 - 11:39

ATHENS — Greece will issue more bonds after last week's successful five-year debt sale that ended a four-year drought, the head of the debt agency has said.

"The bond sale was just the first step," Stelios Papadopoulos, head of the public debt management agency (PDMA) told Kathimerini daily on Sunday.

Greece on Thursday raised 3.0 billion euros (US$4.2 billion) at under 5.0 per cent interest, a move welcomed by its EU-IMF creditors.

A day later, visiting German Chancellor Angela Merkel said Greece's return to the international bond markets showed "renewed confidence" in the crisis-hit country.

The PDMA chief on Sunday said Greece wanted to "pique the interest of foreign investors, so they can focus on the real reform carried out in the country".

The aim was also "to permit comparison with the five-year bonds of other states, as this is the most common midterm maturity period for public debt", he said.

Athens also believes that the successful sale will lower the cost of treasury bills, which have been Greece's staple choice of debt issue for the past four years.

"It was done to lower the average borrowing cost of the Greek state by squeezing the excessive cost of treasury bills," Papadopoulos said.

Greece has lately sold three-month and six-month treasury bills at between 3.0 and 4 per cent interest.

The newspaper said that Greece could next issue three-year, seven-year of 10-year bonds, depending on market demand.

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 EU and IMF to avoid defaulting.

Four years of 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.

An IMF official noted later on Sunday that Greece's public debt was still "exceptionally" high at 175 per cent of output and that the country's ongoing bailout would need "more financing".

"In our view, (the bailout) is not fully financed the whole way to 2016 and one would find some more money," Poul Thomsen, the IMF mission chief on the Greek bailout, told Mega channel.

"We are not looking at a big amount...nothing compared to the past, but one would need to look for some more official assistance," Thomsen said.

Greece is waiting for EU data agency Eurostat to confirm in late April its first primary budget surplus in years – that is, a budget in surplus before counting debt servicing costs. — AFP

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