Greece to auction 875 mln euros of 6-month T-bills on March 4

Greece will sell 875 million euros of six-month treasury bills on March 4 to refinance a maturing issue, the country’s debt agency PDMA said on Friday, in a sale that will be closely watched as the government faces a possible funding gap.

Greek banks use T-bills as collateral to borrow from the European Central Bank’s emergency liquidity line and then invest the money in more T-bills. This helps the state to cover its short-term needs but the government, which is frozen out of the bond market, says it may struggle to meet its obligations as early as next month.

Issuing T-bills is the only source of commercial borrowing for the leftist government of Prime Minister Alexis Tsipras but the country’s EU/IMF creditors have set a 15 billion euro cap on such issues and it has already been hit.

Athens has asked for the maximum level to be raised as foreign investors have increasingly fled T-bill sales in recent months due to political uncertainty created by a snap election won by Tsipras’s radical Syriza party and weeks of wrangling with euro zone partners to extend Greece’s bailout program.

The settlement date of the new T-bills will be March 6 with only primary dealers allowed to participate and no commission will be paid. A previous sale in February was priced to yield at 2.75 percent.