The European Central Bank is sticking to its tough stance as – without any concrete progress in negotiations with Athens – it has not expressed any intention of easing its financing terms for Greece. Still, Wednesday’s treasury bill issue by the country’s Public Debt Management Agency (PDMA) is expected to be covered even without additional support from Frankfurt.
Sources say that Monday’s Eurogroup has not changed anything in the ECB’s decisions. As Greek officials note, unless the inspection is completed or there is clear progress in negotiations between the government and its creditors, then the ECB will not have the scope to ease its regulations. In this context Greece cannot expect any earnings returns from the Eurosystem’s Greek bond holdings (SMPs) or any increase in the limit of the T-bills Greek banks purchase from the current 15 billion euros.
Furthermore the ECB will not alter its directive to the Greek lenders that provides that they should not increase their T-bills exposure and can only recycle the short-term debt they already possess. Even so, the Greek side will likely submit a fresh request for an increase in the T-bill purchase limit at Wednesday’s ECB board meeting.
The government expects Wednesday’s 1.6-billion-euro T-bill issue to be fully covered, as banks will refinance the debt they acquired on February 18 while the Bank of Greece will refinance the amount it holds through the state account, which also includes the reserves of other state entities and social security funds. There is optimism that if a problem arises in covering the full amount, the gap will be covered in other ways. It also remains to be seen what the attitude of foreign investors will be, as there was talk of Chinese funds participating in last week’s T-bill issue.
At any rate the Finance Ministry opn Tuesday assured again that the debt maturing on Friday will be repaid as normal, and the 350 million euros due to the International Monetary Fund on the same day will be disbursed without problem.