Greece sold 1.3 billion ($1.7 billion) euros of treasury bills and its financing costs rose for the first time this year after general elections failed to yield a clear winner capable of forming a government.
Greece sold the 26-week bills today to yield 4.69 percent, up from 4.55 percent at the previous auction on April 10. Investors requested 2.6 times the amount sold compared with 2.62 times previously, the Athens-based Public Debt Management Agency said.
Greek political leaders are meeting for a second day to try to form a government after New Democracy?s Antonis Samaras, who won the most seats in Parliament, said he couldn?t forge a coalition. The stalemate is fueling investor concerns about the country?s ability to stick to the terms of its European Union bailout and remain in the single currency.
?With another round of new elections by June looking to be a reasonably high probability, the political uncertainty in Greece will remain a big issue for some time now,? Deutsche Bank AG strategists Jim Reid and Colin Tan wrote in a note to investors today. ?It?s also inevitable that there will be much debate about Greece?s future within the eurozone.?
The attempt to form a government now passes to Alexis Tsipras, the head of Syriza. Tsipras ran on a pledge to overturn Greece?s bailout, helping Syriza emerge as the country?s second- most voted party. He has said he will seek to form a coalition with other parties that favor reversing the 130-billion-euro bailout, the country?s second aid package, which came after Greece carried out the biggest debt restructuring in history.
Citigroup Inc. said on Monday that the election outcome increases the risk of Greece leaving the euro by the end of 2013 to as high as 75 percent.
Treasury bill sales are the only source of private finance Greece relies on after the country received the two rescue packages from the EU and International Monetary Fund. Interim Prime Minister Lucas Papademos in March secured the second package, after private creditors wrote down about 100 billion euros of their bond holdings. [Bloomberg]