Ministry headache over T-bills

The Finance Ministry is trying to find a solution to cover treasury bills to be issued next Wednesday, while the payment of the next tranche to the International Monetary Fund the following day appears certain.

On April 8 the ministry will issue new T-bills to cover older ones worth 1.4 billion euros that expire on April 14. The problem with the refinancing of those maturities is that some 750 million euros’ worth is in the hands of foreign investors who have made it clear they will not purchase any new T-bills.

That means the government will have to find other sources to tap that 750 million euros. That cannot be the Greek banks which used to cover the issues in the past as the European Central Bank has ordered local lenders not to increase their exposure to Greek debt as that would constitute a risk at this stage.

Even the Bank of Greece – which on previous occasions has been able to cover the issues through its common account used by general government entities – has very little room left for maneuver anymore.

The only remaining solutions are for a political agreement with the eurozone to ease the tight cash conditions in Athens, or for the government to draw liquidity from state entities through short-term borrowing (repos).

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