T-bill demand slumps to lowest point in eight years

Demand for Greece’s treasury bills slumped to a more than eight-year low at a sale on Wednesday as the government struggled to strike a new bailout deal and avert a funding shortage.

The nation sold 812.5 million euros of six-month bills, with an average yield of 2.75 percent, the Public Debt Management Agency said.

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities allotted, fell to 1.3, the least since July 2006.

Greece has 947 million euros of debt coming due on Friday.

“There is uncertainty surrounding the Greek cash position,” said Felix Herrmann, an analyst at DZ Bank AG in Frankfurt.

“Greek banks, the main buyer of T-bills, are more reluctant when it comes to buying. There is a lot of uncertainty whether Greek banks will be able to get enough liquidity from March onwards and this is mirrored in T-bill prices and yields.”

The previous sale of six-month bills on January 7 drew an average yield of 2.30 percent.

The average auction rate dropped to a record-low 0.59 percent in October 2009 before climbing to 4.96 percent in June 2011, according to data compiled by Bloomberg.

That compares with a rate of 7.83 percent set at an auction in February 2000, the highest on record in data starting that month.