Athens resorts to more T-Bills

Eurozone governments have turned down Greece?s request for a bridge loan to cover a bond of 3.2 billion euros that matures on August 20, in response to which the government will resort to an increased issue of treasury bills this month.

The Public Debt Management Agency (PDMA) announced on Tuesday that it will issue T-Bills of 6 billion euros, up from the usual issue of about 4 billion euros per month.

After the rejection of a bridge loan to cover committments until the next bailout tranche arrives, probably in September, Athens proposed the activation of a clause

for a one-month extension of a bond?s maturity with its holder?s consent, i.e. the European Central Bank. Greece even went as far as to ask for a two-month extension, though this proposal was also rejected over fears that it could generate negative impressions and comments from analysts and the international media, as well as unrest in the markets as it would constitute a de-facto default.

The issue of the T-Bills requires the approval of the ECB, expected tomorrow. With the expanded issue of T-Bills and the use of other funds from the Hellenic Financial Stability Facility (about 3 billion euros, but sources say that 1 billion has already been used), the state will be able to cover its obligations in August and possibly in September, too.

The Finance Ministry expects an evaluation by the so-called troika — the inspectors of Greece?s creditors — to be completed by September with a positive report on the country?s progress, so that the eurozone and the International Monetary Fund approve the next installment of the second bailout in time.

As a result, disposable cash in state coffers is at a critical point and the country is under the constant threat of ?sudden death.? Alternate Finance Minister Christos Staikouras told state television channel NET on Tuesday morning that ?cash reserves are almost zero. It is risky to say until when (they will last) as this always depends on the budget execution, revenues and expenditure. But we are certainly on the brink,? he conceded.

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