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Economy

Greece to sell seven-year bonds

Reuters

Greece has issued a seven-year bond in order to raise billions of euros to pull the country out of its debt crisis. The government’s debt office made the announcement four days after the European Union agreed on a financial aid package for the debt-ridden country.

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Bond strategist at CM-CIC Securities Valerie Plagnol said Greece is testing its access to the markets after the backing it received from Brussels.

"The question is at which point the country no longer has access... for that is when the crisis will strike," she said.

Greece has an urgent need to raise money because it has to ensure funding by May to repay 20 billion euros of debt. It must raise around 54 billion euros in loans this year.

The Greek debt problem has caused a deep crisis in the European Union and eurozone, and has caused the euro to fall.

The yield on Greek ten-year bonds rose again on Monday to 6.208 percent compared to 6.193 percent late Friday.

Greek Prime Minister George Papandreou has insisted that his country can clean its fiscal house on its own but that it needed backing from the EU to ease pressure on the bond market.

In other European economic news:

  • Poland no longer needs a 16.2-billion euro line of credit provided by the International Monetary Fund, its central bank said. Instead, the central bank said it could provide the IMF with a loan to "help other countries overcome the effects of the global crisis", it said in a statement. Poland is the only member of the 27-nation European Union to have experienced growth in 2009, and the IMF this month forecast that its economy will expand by 2.75 percent this year and by 3.25 percent in 2011.
     
  • The Romanian central bank will cut its main interest rate by half a percentage point to a record low of 6.5 percent, as inflation eases. This decision, to come into effect  Tuesday, was widely expected by analysts as Romania is trying to recover after a severe recession last year, when the economy contracted by 7.1 percent. Its s annual inflation rate dropped to 4.49 percent in February compared to 5.2 percentthe month before. The country is currently benefiting from a 20-billion-euro aid package from the IMF, the World Bank and the EU.
     
  • Austria's public deficit was lower than expected last year, but the shortfall between revenue and spending still exceeds European Union limits, the country’s statistics office said Monday. Final figures by Statistik Austria showed a deficit of 3.4 per cent of gross domestic product in 2009, down 0.1 percentage points from a January estimate, and a public debt amounting to 66.5 percent of gross domestic product. The country's public deficit had stood at just 0.3 per cent of national output in 2008, well below the limit of 3.0 percent required for countries that use the euro as their currency.
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