Greek Debt Sale Hailed a Success; Moody's Downgrades Portugal

Sale seen as important test of Greece's financial recovery

Greece on Tuesday, July 13 raised $2.04 billion in its first debt auction since its financial bailout in May.

The country, whose auction attracted strong investor interest, said the sale of 26-week treasury bills was oversubscribed 3.64 times, at an interest yield of 4.65 percent, according to the Associated Press.

The government has said it hopes to return to international bond markets with long-term debt issues in 2011. As the wire service notes, debt-strapped Greece narrowly avoided default in May, when it received the first installment of a rescue package from euro-currency partners and the International Monetary Fund.

The news did little to quell anger over recent austerity measures imposed by the government. The AP reports the Acropolis in Athens was closed for several hours Tuesday by site workers who were demanding back pay. Flights are also set to be disrupted Thursday, with air traffic controllers planning a work stoppage between 0800 and 1200 GMT.

The Finance Ministry said Monday that Greece's budget deficit has been cut by 46 percent, which beat its own targets. Greece has said it will bring the deficit from 13.6% of GDP in 2009 to 8.1% in 2010.

Separately in the euro zone, Moody's Investors Service announced it has cut the Portugal's sovereign debt rating to A1. The ratings agency said weakening financials and economic-growth prospects were the cause.

Dow Jones reports the agency also questioned whether the government's economic reforms will be sufficient to reverse the deterioration in the country's debt metrics, especially as labor-market reforms have been relatively recent. It said it only expects to see the Portuguese economy grow by between 0.5% and 1% in 2010, while GDP growth is expected to fall "close to zero" in 2011 before leveling out at around 1.5% in the medium term.

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