Greece pays bond investors 5 times Spain yield spread

LONDON: Greece, the European Union’s most indebted member, offered more than five times the yield premium of comparable Spanish debt to lure investors to its first bond sale since a bailout was agreed to for the nation. Greece priced the € 5 billion ($6.7 billion) of seven-year bonds to yield 310 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction , who declined to be identified.

The bonds’ 6% yield equates to 334 basis points more than seven-year German bunds, Europe’s benchmark government securities. That compares with a yield premium, or spread , of 61 basis points for similar-maturity Spanish debt and 114 basis points on Portugal’s government bonds due 2017, according to composite prices on Bloomberg. Italy’s seven-year bonds yield 45 basis points more than bunds, the prices show.

“Greece’s borrowing costs exceed those of Spain and Portugal as it still needs to convince the market that it can roll over existing debt,” said Michiel De Bruin, who will probably buy the securities for the $28 billion of assets he helps manage as head of euro government bonds at F&C Investments in Amsterdam. “Only then is it likely that borrowing costs will fall.”

Prime Minister George Papandreou’s government must raise about € 53 billion this year, € 15.5 billion of it by the end of May.