Greece managed to raise 1.62 billion euros in a treasury bill sale on 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 (PDMA) 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 1.25 billion euros but accepted a further 375 million euros 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 country’s rating from B to CCC.
Greece’s public debt is expected to reach 350 billion euros 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.
Meanwhile, Spain and Italy also faced higher borrowing costs at debt auctions on Tuesday.
Spain sold 5.4 billion euros of 12- and 18- month Treasury bills, just below the maximum target of 5.5 billion euros, and its 12-month borrowing costs rose to 2.695 percent from 2.546 percent in May.
Italy auctioned 3.5 billion euros of five-year bonds at 3.9 percent, up from 3.77 percent last month.
?Anybody who believes that there?s going to be a positive twist at the (EU) council with respect to Greece should also bet on a relief rally in the other peripherals,? said Ioannis Sokos, a fixed-income strategist at BNP Paribas in London, told Bloomberg.