Greece raises huge sum through treasury bills auction

08:50, January 19, 2011      

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Greece completed another successful auction of three-month treasury bills on Tuesday, raising 650 million euros (869.8 million U.S. dollars) at an interest rate of 4.1 percent, according to the country's Public Debt Management Agency (PDMA).

PDMA and local analysts expressed satisfaction at the outcome of the latest sale in the Greek monthly short-term debt auction program. The agency aimed to raise 500 million euros (669.15 million dollars) and secured the same interest rate as a similar auction held last November.

In October 2010, Greek three-month treasury bills were sold at an interest rate of 3.75 percent. Last week, PDMA raised 1.95 billion euros (2.6 billion dollars) through the sale of six-month treasury bills at an interest rate of 4.9 percent.

It is less than the interest rate Greece secured for the long-term loans released gradually by the International Monetary Fund and European Union since last May, when the eurozone-member country narrowly escaped default.

As Athens negotiates with European partners the extension of the repayment period of the multi-billion euros funds, Greek analysts note that the mass participation of foreign investors in Tuesday's auction, which reached almost 80 percent, reiterates the increasing confidence in the prospects of the ailing economy.

They point to the imminent improvement in the spread of Greek bonds compared to the German ones.

Other analysts on the other hand argue that the international markets seem to remain sceptical about whether Greece will manage to exit the crisis by 2014, according to the Greek government's plan.

They point to the latest downgrade of five Greek banks by credit rating agency Fitch in the past few hours. The credit ratings of the National Bank of Greece, Alpha Bank, Eurobank, Piraeus Bank and Agricultural Bank were downgraded from "BBB-" to "BB+" with a negative outlook, following a similar downgrade of the Greek state bonds to junk status last week.

Fitch and other credit rating firms acknowledge the progress achieved in Greece since May through fiscal austerity and structural reform measures, but express pessimism over the future environment.

Greek and European officials have criticized credit rating agencies of making "unfounded" decisions.

Source: Xinhua

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