T-bill auction pleases government

The government appeared to be happy with the outcome of the six-month Treasury bill auction which took place yesterday, despite its relatively high yield, with the bids accepted reaching 1.17 billion euros. The yield came to 4.82 percent, up from 4.65 percent at a similar auction in July, despite better news regarding Greece’s effort to streamline its economy. The government hopes that Finance Minister Giorgos Papaconstantinou’s tour of Western Europe this week will result in a lower yield when the next auction takes place. A meeting yesterday of the Inner Cabinet was told that that the fiscal adjustment process is going well. Also discussed were the priorities for the fourth quarter of the year. Finance Ministry sources implied after the meeting that the yield in the T-bill auction was satisfactory and expressed optimism regarding the course of budget revenues during the remainder of 2010, adding that they plan to also include the revenues for next January and February as part of 2010. The head of the Public Debt Management Agency (PDMA), Petros Christodoulou, also stated that the yield for the T-bills was very satisfactory, as it had only advanced by 17 basis points while the yield on five-year credit default swaps (CDS) has grown by about 100 basis points in the same period. He added that the bid-to-cover ration was 4.54, against 3.64 in July, as offers came to 4.08 billion euros. Sources suggest that some 30 percent of the 1.17 billion euros drawn yesterday (i.e. some 350 million euros) originated from foreign portfolios. PDMA is expected to accept another 270 million euros tomorrow from noncompetitive offers, taking the total amount drawn on the six-month bills to 1.44 billion. The next step in state borrowing is scheduled for Tuesday, September 21, when PDMA will auction three-month bills. The amount sought will be announced on Friday and will be less than yesterday’s. The government has decided to issue T-bills twice a month instead of twice a quarter. The Finance Ministry expects this to help the markets to open up more easily next year for Greece to issue longer-term bonds. The road shows scheduled to take place in London, Paris and Frankfurt by Papaconstantinou and representatives of Greece’s lenders are expected to also contribute to this end. Papaconstantinou traveled to London yesterday and will have meetings with foreign investors from 11 a.m. to 2 p.m. local time, as well as a number of interviews with British and American media. He is then set to travel to Paris tomorrow for another road show before meeting with his French counterpart, Christine Lagarde. By that evening he will be at a road show in Frankfurt. The originally planned meeting with the head of the European Central Bank, Jean-Claude Trichet, will not take place.

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