The bond was oversubscribed - meaning demand exceeded available bonds - within an hour of the book opening, with 7 billion euros ($9.5 billion) in offers received. The government was seeking a maximum of 5 billion euros ($6.8 billion), said the chief of Greece's debt management agency, Petros Christodoulou. Government spokesman George Petalotis said market response to the issue was encouraging.

“We are pleased because there is very heavy demand, and that means something, it is an indication.” The sale reflects on Greece's ability to raise money to pay off expiring bonds and avoid the risk of default. But although the final offer and yield figures were not immediately available, a note from UniCredit Research said the yield was expected to be around 6.5 percent - more than double the yield on benchmark German bonds of similar maturity.

”While expensive for the issuer, this yield level is about 50 basis points lower than last week,” the note said. Fifty basis points equals half a percentage point. The announcement of the issue comes a day after debt-ridden Greece detailed a whole new round of painful austerity measures, including salary cuts for civil servants, pension freezes and tax hikes on cigarettes, alcohol, luxury goods and gems.

Labor unions fiercely oppose the measures, and have announced protests for Friday, when Parliament is set to approve draft legislation on the new austerity plan that aims at 4.8 billion euros ($6.55 billion) in budget savings this year. The measures were intended to show markets that the government is serious about getting spending under control and will have the money to pay its debts.

Greece has to borrow some 54 billion euros ($74 billion) through sovereign debt issues this year, and has so far raised around 13 billion euros ($18 billion), including treasury bill sales. It has around 20 billion euros ($27 billion) worth of debt maturing in April and May. But low market confidence in the country has translated into extremely high borrowing costs for Athens, and the government has been seeking for a way to borrow at more reasonable rates.