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Economy

Greece Holds Bond Sale ahead of Defense Spending Boost

September 2, 2020

ATHENS — Greece raised 2.5 billion euros ($2.96 billion) in a bond auction Wednesday, taking advantage of low borrowing rates to boost state cash reserves needed for pandemic relief and emergency defense spending amid a tense dispute with neighboring Turkey. 

Finance Minister Christos Staikouras said the money was raised by reopening a June 10-year issue.

"The country has borrowed at the lowest cost ever achieved in a Greek government bond issue: through the issuance of a 10-year bond, raising 2.5 billion euros, with a yield of about 1.2%," the minister said in a statement. 

At the June auction, Greece had raised 3 billion euros ($3.55 billion) with a yield of 1.50%. 

The latest auction was held as Athens seeks to raise money for additional support to pandemic-hit businesses, as well as to increase military spending amid the crisis with Turkey over eastern Mediterranean drilling rights.

Greece and Turkey remain locked in a tense dispute over maritime boundary limits and commercial exploitation rights in the eastern Mediterranean. Both countries are carrying out military exercises and increased naval deployments in the region after Turkey expanded oil-and-gas survey missions in an area between the Greek island of Crete, Cyprus and Turkey's southern coast.

Government officials in Athens say they are planning to boost spending for all three branches of the armed forces in an expansion that is expected to start before the end of the year.

Officials have not commented on Greek media reports that the purchases may include French-made Rafale fighter jets and at least one French frigate.

France has sided with Greece in the dispute with Turkey. The European Union says it will impose sanctions on Turkey unless it takes steps to de-escalate the crisis. Defense Ministers Nikos Panagiotopoulos of Greece and France's Florence Parly discussed the eastern Mediterranean crisis in a call Wednesday, as well as armament programs and ways to forge closer military cooperation, the Greek Defense Ministry said. 

Prime Minister Kyriakos Mitsotakis is expected to announce details of the defense spending increases at an annual speech on the state of the economy later this month. ___

By DEREK GATOPOULOS Associated Press

Follow Gatopoulos at https://www.twitter.com/dgatopoulos 

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