Finance minister George Papaconstantinou said the country did not plan to call on the help of its eurozone colleagues after the short-term T-bill auction finished more than six times oversubscribed.
The successful issue, which comprised six-month and 12-month notes, eased immediate fears over Athens’ ability to finance itself. Greece raised €360m more than it had planned in the face of strong demand.
But the yields it was forced to accept for the T-bills – nearly 4.9 per cent for the 12-month notes – were more than double the rates it paid for borrowing at the same duration in January, explaining investors’ appetite. In contrast, Belgium issued a similar volume of T-bills at an average yield of just under 0.68 per cent.
As the positive impact of the morning’s placing faded, analysts remained unconvinced over Greece’s ability to fund itself without turning to the €30bn support package put on offer by eurozone ministers at the weekend. Greece needs to raise a further €10bn before May through two bond issues, one of which is expected to be denominated in dollars.
Ionnis Sokos of BNP Paribas said: “There could only have been a negative surprise [with the T-bill sale], not a positive one. The real test will be the next bond auction.”
John Anderson, head of credit at Gartmore, told City A.M. the market would test the Greek government to the limit by “pushing yields to a limit where it has no choice but to draw upon the [rescue] package.”
Greece is likely to turn to the deal if the interest on its next bond is priced well above the rescue package’s five per cent rate, one analyst said.