Greece raises 390 million euros at increased rates

Tuesday, 9 November 2010 23:36 - - {{hitsCtrl.values.hits}}

ATHENS, (AFP) - Greece raised 390 million euros (544 million dollars) in a sale of six-month treasury bills on Tuesday, but had to offer steeper terms to attract investors, the Greek debt management agency said.

The yield offered was 4.82 percent, compared to 4.54 percent for an equivalent treasury bill issue worth 900 million euros a month earlier.

The latest sale was originally intended to raise 300 million euros, and received offers worth 1.54 billion euros, the agency said.

Greece is eyeing a full return to international markets in 2011 after a scare over its crisis-stricken finances dried up its loan access earlier this year and drove it to the brink of bankruptcy earlier this year, also putting pressure on the euro.

After a last-minute loan rescue by the European Union and the International Monetary Fund, Athens has limited its issues to three and six-month bills on a monthly basis that have attracted strong demand.

In October 12, the six-month treasury bill batch worth 900 million euros received nearly 3.8 billion in offers. The agency eventually settled for 1.17 billion euros.

But the yield gap, or spread, on longer-term Greek bonds compared to German obligations that are considered Europe’s safest has remained prohibitively high.

This is a sign that Athens would be called to once again pay unbearable rates if it did not have the safety cushion of the three-year, 110-billion-euro loan from the EU and the IMF.

Athens is struggling under a debt mountain of 300 billion euros and its economy is caught in a deepening recession.

Greece has so far received praise from the EU and IMF on its application of a draconian programme of pay and pension cuts and tax hikes to bring down its budget deficit.

But the EU’s economic affairs commissioner has warned that Athens may be required to make additional austerity cuts to meet 2011 budget deficit targets as revised calculations will now include indebted public companies.

Revised figures on the Greek budget deficit by EU data agency Eurostat are expected later this month.