Thursday, April 10, 2014

Greece Triumphs in Bond Odyssey

by Richard Barley

Wall Street Journal

April 10, 2014

So Greece is back. Investors placed €20 billion ($27.7 billion) of orders for its €3 billion five-year bond, and as a result the final yield came in at just 4.95%. For a country that restructured its debt only two years ago, that is a remarkable result.

The final yield is not only way beneath the initial suggestions that Greece's bond could yield 5.25% to 5.5%, implying that investors have given up a lot of potential gains already; It also is less than Ireland paid when it issued its first postcrisis five-year bond. True, Ireland did so in July 2012, when Spain was teetering on the brink of junk status and investors still had doubts about the survival of the euro. But Ireland, which is far more creditworthy than Greece, paid a yield of 5.9% then.


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