Low-risk debt to test the water

Greece is set to see how the wind blows in capital markets as soon as next week with its first auction of short-dated debt since securing a 110-billion-euro emergency funding package from the International Monetary Fund and its eurozone partners in May. «There will be an auction of 26- and 52-week treasury bills next week, July 13, as part of a quarterly rollover of maturing paper,» the official, who did not want to be named, told Reuters. «The amount will be announced on Friday by the country’s [Public] Debt Management Agency (PDMA).» The mammoth bailout plan agreed to with the EU and the IMF has been designed to allow Greece to stay away from markets until the first quarter of 2012. But the government can continue to issue T-bills during the three-year funding period. «Greece will maintain contact with the primary market in the least risky segment of the yield curve,» the official said. Greece’s debt crisis caused its borrowing costs to rocket, sparking fears of contagion in the eurozone and weakening the shared currency as austerity measures to shore up public finances are seen hitting economic growth. A total of 2.16 billion euros in six and 12-month T-bills to expire July 16 are to be auctioned. The official said another auction of 13-week paper will follow on July 20 to roll over 2.4 billion euros of T-bills maturing on July 23. Finance Minister Giorgos Papaconstantinou said earlier this week that Greece may enter capital markets to roll over long-term debt next year after data showed the budget deficit has been cut more than 40 percent in the first half of the year. Meanwhile, ratings agency Fitch, which still has Greek paper rated investment grade since last downgrading the sovereign debt in April, described the latest news coming out of Greece as improved. «The news that we’ve got coming through since our last rating action on Greece, which was in April, has, if anything, been on the slightly more positive side,» Brian Coulton, managing director of European ratings at Fitch Ratings, told Reuters.

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