BUSINESS

Cost of borrowing via T-bills drops to pre-bailout levels

By Sotiris Nikas

The yields of the 13-week treasury bills Greece auctioned off on Tuesday returned to levels not seen since before the country asked for a bailout in 2010, declining to 2.45 percent from 3.10 percent in March in a sure sign that the successful five-year bond issue last week has set T-bill rates on a new basis.

The Public Debt Management Agency (PDMA) issued the three-month bills, while Prime Minister Antonis Samaras made special reference to the considerable decline in the cost of borrowing for the country as yesterday’s was the lowest yield since January 22, 2010, when it had stood at 1.67 percent.

Notably, the very strong interest on the part of foreign investors in the issue saw their their participation reach 50 percent, a big jump compared to previous years when such issues were almost exclusively covered by the country’s banks. Such was the issue’s draw that submitted offers reached 3.416 billion against just 1.25 billion euros that the PDMA had sought. The amount offered was 1.1 billion euros higher than that for last month’s 13-week bond issue.

The PDMA borrowed 1.625 billion euros on Tuesday and will add another 375 million on Thursday for a total of 2 billion.

Finance Ministry sources said the average cost of borrowing for the Greek state after the issue of the five-year bonds will improve thanks to the expected decline in the interest rates of all T-bills. They estimate that the three-month and six-month bills will continue their declining course in the coming months to consolidate at around 1 to 2 percent. Consequently the drop in the cost of borrowing via T-bills will entail savings of 450 million euros, given that at the moment the sum of Greece’s T-bills reaches 15 billion euros. When the additional 90 million euros from the switch to market borrowing is deducted, the result points to savings of 360 million.

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