Sunday 28 March 2010 10:37 pm

Greece mulls bond issue

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GREECE is considering whether to tap the public debt markets in the next few days with a €5bn euro (£4.5bn) bond issue.

This follows the EU’s decision to save the indebted nation with a last-resort rescue plan last week.

A bond issue would help to tackle the country’s deficit, which stands at 12.7 per cent of GDP. It would also be a test of the agreement by EU leaders to resolve the country’s debt crisis.

Faced with €300bn debt, Greece has to raise €55bn, with at least €16bn needed to service maturing debts between now and the end of May.

The EU rescue plan, struck after intense wrangling, provides support through a combination of loans from eurozone countries and aid from the International Monetary Fund in the event that an indebted member state is unable to refinance itself.

It is hoped that the deal will lower Greece’s unprecedented premiums. Recent market forays have seen it pay yields on its sovereign debt in excess of 6 per cent.

After the deal was struck, the Greek prime minister, George Papandreou, said it sent a “very positive signal to the markets” and added: “We will find an opportune time to go out on the market.”