T-bills sold but demand declines

Greece successfully auctioned yesterday nearly 400 million euros in treasury bills, albeit at a higher price than at the sale sale, as the number of investors betting that the country will not be able to meet its debt requirements grew. The Public Debt Management Agency (PDMA) said the three-month T-bill sale, originally planned to raise 300 million euros, raised 390 million euros. The sale resulted in a yield of 4.1 percent, compared with 3.75 percent in a three-month T-bill auction on October 19. «The rising yield reflects heightened concerns about Ireland and Portugal and partly also the revision of Greece’s deficit,» Stelios Vyzantinopoulos, senior fixed-income trader at Marfin Bank, told Reuters. Yesterday’s auction was oversubscribed 4.98 times compared with 5.19 times on October 19. Foreigners bought between 35 and 40 percent of yesterday’s offer, compared with more than half of the previous sale, according to the PDMA. Greece began monthly treasury bill sales in September to maintain a presence in the market after its financial crisis blocked it out of the long-term debt market, with investors demanding prohibitively high interest rates for its bonds. Greece led a surge in the cost of insuring European government debt yesterday after Austria threatened to block its next transfer of European Union funds on the grounds that Athens is not meeting its tax revenue goals. Credit default swaps on Greece soared 86 basis points to 944, the highest since June 29, according to data provider CMA. Contracts on Ireland rose 22 basis points to 515, Portugal climbed 13 to 426, Italy increased seven to 188 and Spain was up eight at 259. The Greek-German yield spread on 10-year bonds widened four basis points to 889 basis points.