Greece raises euro1.17B ($1.5B) in oversubscribed treasury bill auction

Tuesday, September 14, 2010

Greece raises $1.5 billion in debt sale

ATHENS, Greece — Greece raised €1.17 billion ($1.5 billion) in an oversubscribed sale of 26-week treasury bills Tuesday, in the first of a regular monthly debt issue as Greece tests the market’s appetite for buying Greek debt.

The treasury bill sale, originally for €900 million,— was oversubscribed 4.54 times — compared to 3.64 times for the last 26-week T-bill issue in July — and had a yield of 4.82 percent, the Public Debt Management Agency said.

It accepted additional noncompetitive offers of €270 million. The settlement date is set for Friday.

Greece is in a deepening recession, while laboring to rein in a runaway budget deficit and public debt that brought it to the brink of bankruptcy in May. That was avoided through a three-year, €110 billion package of emergency loans from the European Union and the International Monetary Fund.

The country still cannot tap markets for long-term debt because the interest rates demanded for its bonds remain prohibitively high, but it has begun issuing monthly treasury bills.

Tuesday’s sale was well-received by analysts.

“This is a good result, especially considering that there are no T-bill redemptions this month to support demand,” Chiara Cremonesi, fixed income strategist at UniCredit Research, said in a note to investors.

“While one could argue that the good result was likely driven by the attractive yield level … and by the limited risk of the investment (the EC/IMF loan will still be on in six months to cover borrowing needs), still we regard today’s result as good, given that the auction came in a rather difficult environment for periphery paper,” the note said.

In return for the EU and IMF loans, the government has imposed strict austerity measures in an effort to overhaul the country’s economy and bring the budget deficit down from 13.6 percent of gross domestic product in 2009 to 8.1 percent this year.

The measures, which have included cutting public sector salaries, trimming pensions and increasing taxes across the board, have angered unions.

About 200 railway workers demonstrated in central Athens on Tuesday to protest plans to partially privatize the rail company, while train routes were disrupted as workers held limited work stoppages.

(This version CORRECTS Corrects time element in last graf.)

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