Greece sells euro1.62 billion in treasury bills

AP News
Posted: Jun 14, 2011 6:22 AM
Greece sells euro1.62 billion in treasury bills

Greece managed to raise euro1.62 billion ($2.33 billion) in a treasury bill sale Tuesday, a day after it was accorded the lowest sovereign credit rating in the world over fears private investors will be invited to share the burden of a potential Greek restructuring.

The public debt management agency said the sale of 26-week bills carried a higher interest rate of 4.96 percent, compared to 4.88 percent in the previous debt sale of the same maturity last month. The agency had initially sought to raise euro1.25 billion but accepted a further euro375 million in additional bids.

The sale was oversubscribed 2.58 times, while last month's was oversubscribed 3.58 times.

The auction came as markets assess the impact of Standard and Poor's decision to slash the debt-ridden country's rating from B to CCC.

Greece's public debt is expected to reach euro350 billion ($502 billion) this year, or more than 150 percent of gross domestic product, and it looks highly unlikely that Athens will be able to meet all of its obligations on time.

Standard and Poor's warned of the likelihood of one or more defaults as the country grapples to meet its financing requirements. It said that delaying Greece's debt repayments _ a move proposed by Germany to get private investors to take on some of the bailout burden and give the country more time to reform its economy _ would be considered a default.

The European Central Bank is against Germany's proposed debt extension, arguing that a default by a eurozone country could have devastating consequences on Europe's broader financial sector.

Finance ministers from the 17 euro nations will hold an emergency meeting on Greece's problems in Brussels on Tuesday.

The Greek government is seeking to pass a new austerity package through Parliament by early July, to secure continued funding from a euro110 billion ($158 billion) international bailout fund. The measures combine euro28 billion worth of cutbacks and tax hikes by 2015 with an ambitious euro50 billion privatization program.

Coming on the heels of last year's big round of austerity policies, the new measures have angered labor unions, which have called a general strike for Wednesday.

The walkout is expected to stop all train and ferry services, close schools and public services and leave hospitals operating with emergency staff. But flights will not be disrupted, as on Tuesday the flight controllers' union said it was calling off its planned participation in the strike.

Early Wednesday, protesters who have been demonstrating peacefully outside Parliament in Athens for the past three weeks say they will try to blockade the building, while unions are planning protest marches through the city center.