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Greek Bond Sale Sees Demand, Yield Slightly Higher Post-Bailout

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Tuesday’s auction by Greece of some 1.63 billion euros ($2.35 billion) in 6-month T-bills, while presenting slightly higher yields than its last auction in March, also drew more interest from foreign investors and somewhat higher demand.

Reuters reported that yield was up by five basis points to 4.80%, which is higher than the approximately 4.2% assessed on Greece’s European Union-International Monetary Fund loans. That rate is down from its previous rate up until March, when it sat at 5.2% and the auctions Greece conducted for short-term debt actually carried a lower cost to Athens than the bailout. However, at a meeting of euro zone leaders last month, it was agreed to drop Greece’s interest rate by a point and extend its repayment period.

Greece’s debt agency PDMA needs to roll over 2.4 billion euros of maturing debt later this week, with 1.44 billion of that in 6-month T-bills and 960 million euros of one-year paper that will come due on April 15. Next week it plans to hold another auction, this time for 3-month T-bills. The settlement date for the 26-week auction is scheduled for April 15, with only primary dealers allowed to take part and no commissions on offer.

Tuesday’s auction saw foreign investors purchasing about 41% of the offerings, compared to 31% at the previous auction. Although there has been some talk of debt restructuring at some point in the future, such concerns did not seem to be part of the auction atmosphere. A bond dealer at a large Greek bank was quoted in the report saying, "The yield was around where we expected, the cover ratio as well. Talk of debt restructuring does not affect T-bills, they would not be included. The higher allocation to foreign buyers is positive."


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