Greece’s first bond auction in 2010 met with strong demand yesterday, reaching approximately five times the initial offered size for the five-year bond: the government initially went to the market to borrow €5 billion, but demand reached €25 billion, though the total amount borrowed reached €8 billion.

But success came at a high cost of servicing the country’s debt. The premium Greece paid to sell the bonds was considerably higher than in the past, thereby underlining the need to restore credibility and consolidate public finances.

However, the Finance Ministry described the outcome of yesterday’s bond auction as proof that Greece will be able to pull off this year’s borrowing programme, which is expected to reach about €53 billion.

Commenting on the sitution, the Organisation for Economic Cooperation and Development’s secretary-general, Angel Gurria, said yesterday that Greece is taking the right measures to turn around its fiscal deficits and he isn’t concerned that the country will default on its debt.

Furthermore, a Moody's rating agency analyst told Reuters on Monday that "strong demand for a Greek sale of five-year bonds confirms it will be able to finance itself this year."

Source: GREEK NEWS AGENDA issued by the Secretariat Genera

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