Amazing comeback as formerly bust Greece finally borrows again

THE GREEK government will today return to the international capital markets for the first time since 2010, launching a new bond despite the fact that the country is still mired in recession and deflation.

Recent rumours of a sovereign sale were confirmed yesterday as the country’s finance ministry outlined plans to issue a five-year bond, ahead of German chancellor Angel Merkel’s trip to Athens at the end of this week. Daiwa Capital Markets researchers said that grey markets indicate the yield on the bonds may be below five per cent, an amazing turnaround for the embattled economy.

Reports yesterday suggested the government will dip its toe back into the water with a relatively small €2.5bn (£2.06bn) issue – but sources said that the sale had already attracted €11bn of interest from investors.

Deutsche Bank and JP Morgan will be joined by Goldman Sachs, HSBC, Morgan Stanley and Bank of America Merrill Lynch to run the sale. Yields on Greece’s 10-year bonds plunged below six per cent yesterday for the first time since 2010, declining to 5.89 per cent.

During 2012, yields pushed above 35 per cent as markets feared that the country would be forced to default. The country has not issued sovereign debt since the first half of 2010, when the euro crisis forced a bailout from the European Central Bank, European Commission and International Monetary Fund.

The government has now recorded a primary surplus, but growth remains elusive, and GDP dropped by 3.7 per cent during 2013. It has lost almost a quarter of its GDP since 2008.