Debt cost drops more than expected
The Greek government raised 1.17 billion euros yesterday by selling 13-week treasury bills in an auction that saw borrowing costs fall more than expected. The Public Debt Management Agency (PDMA) said that it received bids totaling 4.67 billion euros in a debt sale aiming to raise 900 million euros. The interest rate for investors dropped to 3.75 percent from the 3.98 percent offered in a similar issue on September 21. Dealers had expected it to fall somewhere between 3.8 and 3.9 percent. PDMA officials said that foreigners bought more than half of yesterday’s offer, though that was down from last month’s foreign participation of about 70 percent. Effectively shut out of international bond markets as borrowing costs soared earlier this year, Greece hopes to be able to start reissuing bonds next year. Finance Minister Giorgos Papaconstantinou said in Luxembourg yesterday that he expects government bonds to be issued next year will have a longer maturity. Government sources told Kathimerini last week that the PDMA may start issuing 12-month treasury bills in the coming months to measure demand for Greek government bonds, which have been classified by ratings agencies as «junk.» Progress made in Greece’s plans to reduce its deficit have boosted sentiment in bonds, sending the premium demanded to hold 10-year Greek government paper over German bunds to below 700 basis points last week. Meanwhile, Spain raised more than 6 billion euros in bond auctions yesterday at lower interest rates than previously in a sign that investor concerns over its ability to slash its public deficit are easing. Spain’s treasury said it raised 4.18 billion euros in 12-month bonds at an average yield – or return – of 1.842 percent, down from 1.908 percent at the previous auction on September 21.
