ATHENS, Greece (AP) — Greece is on the brink of escaping the financial wilderness.
The eurozone's least credit-worthy country said Wednesday it is about to return to bond markets, for the first time since international bailouts saved it from bankruptcy four years ago.
Amid growing signs of market confidence in an economy long seen as a basket case, the finance ministry said it instructed international banks to issue a five-year, euro-denominated bond "expected to be priced and carried out in the immediate future."
The announcement came as labor unions, angry at protracted belt-tightening amid a deep recession and 28-percent unemployment, held a 24-hour general strike, with peaceful protests in Athens and Thessaloniki.
The ministry did not reveal the size of the bond sale, but a senior government official said Greece was initially seeking 2.5 billion euros ($3.45 billion) — a tiny sum compared to the 240 billion-euro bailout package. Although the date was not formally announced, the official said it would be Thursday morning.
Hammered by a severe loss of confidence triggered by massive debt and a huge budget deficit, Greece has been exiled from bond markets costs since 2010. It still depends on bailout funds from the International Monetary Fund and other European countries that use the euro — provided on condition it keeps up a series of deeply resented spending cuts and tax hikes.
However, the country's interest rates have been falling steadily in recent months as its public finances have improved following tough austerity measures.
The bond issue "is an important step in Greece's effort to fully exit the crisis," government spokesman Simos Kedikoglou told The Associated Press minutes after the announcement.
The announcement comes two days before a visit by German Chancellor Angela Merkel, whose country is the biggest single contributor to Greece's rescue loans, and a loud proponent of tough austerity. The conservative-led government is trailing the left-wing main opposition party before European Parliamentary elections next month.
Analysts say the sale is likely to attract healthy investor interest, but warn that Greece's troubles aren't yet over.
Megan Greene, chief economist at Maverick Intelligence, said the timing is good as peripheral bond yields have fallen significantly.
"But there is a fundamental disconnect between easy market conditions and economic fundamentals," she told the AP. While Greece has made a "huge" fiscal adjustment and achieved a primary budget surplus — which excludes debt servicing costs — she said the country still faces a lot of work on market liberalization to attain sustainable growth.
"Add to this significant political risk in Athens and market sentiment towards Greece could shift again in the future," she said.
On Tuesday, Greece's short term borrowing costs dropped considerably, with interest rates on a six-month treasury bill sale falling to 3 percent, from 3.6 a month earlier.
But ratings agencies still consider Greek government bonds to still be well below investment grade.
Greece last sold a five-year bond in February 2010, which carried a 6.1 percent coupon. Judging by declining yields for the benchmark 10-year bond, the new issue is expected to be cheaper.
But analyst Dimitri Mardas, economics professor at Thessaloniki University, argued it would still be too pricey for a country with a tiny growth forecast this year and high pre-existing debt — standing at around 175 percent of gross domestic product.
"Can the Greek economy, with its limited dynamic, take borrowing costs of 5-6 percent, even though these are the lowest in the past four years?" he said in a note. "Probably not. So the vicious circle of over-indebtedness will continue unabated."
Mardas said the issue would likely attract investor interest due to the high returns likely to be offered.
"Whoever is fast enough will take advantage of that," he said. "But Greece will be burdened with new onerous interest rates."
The government argues it can carry the cost as it is issuing a relatively low sum, and the bulk of its debt carries long maturities and an average yield of 2.1 percent as it is held by governments and central banks rather than private investors. Officials also insist positive market reception for the sale will serve as a valuable vote of confidence.
Other analysts noted private investors suffered significant losses when their bond holdings were trimmed in 2012 to ease Greece's crushing debt load.
"You have to ask who in their right mind would want to take a chance on a country that haircut its previous bondholders ... and where the political and economic situation remains extremely unpredictable," said Michael Hewson, chief market analyst at London-based CMC Markets.
Associated Press writer Derek Gatopoulos contributed to this report.