T-bill auction set for next week

Greece will auction 26-week Treasury bills on Tuesday, a senior official at the country’s debt agency PDMA said yesterday, as the country activates a plan for monthly sales of short-term paper that it hopes will make the issuance process easier. «We’ll start with 26-week T-bills next week,» the official, who did not want to be named, told Reuters. «The amount to be auctioned will be announced on Friday.» Financed by loans from its eurozone peers and the International Monetary Fund under a 110-billion-euro bailout after its borrowing costs became prohibitive, Greece had been tapping markets for T-bill rollovers only. Last month, the Greek government decided to switch to regular, monthly T-bill issues instead of quarterly auctions to have more leeway in managing its short-term debt. The change accords with an EU-IMF memorandum that envisaged Greece switching to monthly T-bill issues this month. Meanwhile, Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts. The Scandinavian country’s $450 billion Government Pension Fund Global has stocked up on Greek debt, as well as the bonds of Spain, Italy and Portugal. Finance Minister Sigbjorn Johnsen says he backs the strategy, which contributed to a 3.4 percent loss on European fixed income in the second quarter, compared with gains on bonds in Asia and the Americas. «The point is, do you expect these guys to default?» said Harvinder Sian, senior fixed-income strategist at Royal Bank of Scotland Group, in an interview with Bloomberg. «Norway has taken the view that they will not. The Greek holdings are particularly interesting because the consensus on the market is that they will at some point restructure or default.» Norway says its long-term perspective will protect it from losses. «One could say we are investing for infinity,» according to Johnsen. «It is important when you look at the time scope of the fund and the investments that there should be a portion of active management.»

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