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Auction of Treasury bonds worth 1.6 billion Euros

08 April 2012 / 17:04:59  GRReporter
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The Ministry of Finance will try to raise the amount of 1.6 billion Euros by auctioning, on Tuesday, six-month treasury bonds.

The amount of the auction was set at 1 billion Euros and with the adoption of non-competitive bids (60 percent of the original amount) it may reach 1.6 billion Euros. The date of the 3-month treasury bonds settlement will be on Tuesday, 17 April 2012, and the maturity of the bonds is on 12 October 2012.

The previous auction of the same securities was on March 6 and their interest rate reached 4.80 percent. With the received amount paid will be the 6-month treasury bonds, issued on 11 October 2011, worth 1.6 billion Euros.


This means that the start of the procedure to reduce the volume of treasury bonds provided by the Ministry of Finance by the order of the Troika, will be delayed since there is no available capital with which to pay the securities' holders.

The aim is not to renew the maturity of all securities but to pay some of them. In this way no state capital will be blocked and liquidity of banks will increase. This implies, however, the availability of capital, with which securities can be redeemed, the maturing of which is approaching, and at present there is no such capital. Apparently the procedure for reducing the volume of short-term securities will begin when the instalments release of the new loan agreement normalizes.

It should be noted that in 2011 the volume of emissions of treasury bonds reached 4 billion Euros per month, an amount, which will gradually be reduced this year. We remind you that in 2011 the Greek State was regularly issuing 3-month and 6-month securities. The total amount of the capital in 2011 reached 45 billion Euros and the average interest rate was 4.67 percent in 2011 against 3.80 percent in 2010.

Moreover, during the first quarter of 2010, interest on loans, received from securities, was particularly low (1.74 percent). During the first quarter of this year, through issuing securities, the Greek state obtained nearly 7 billion Euros with an average interest rate of 4.75 percent. In April, except for the 6-month treasury bond, also expiring are the 3-month securities worth 2 billion Euros, thus increasing the level of maturity to 3.6 billion Euros. Maturity of securities is also expected in May.

Private investors

The 6-month treasury bonds will be offered to private investors for amounts up to 15,000 Euros each, with the understanding that the securities were excluded from the PSI. According to the Organization for Government Debt Management, the 6-month securities will have exempt income under the condition that they will be kept until the date of maturity and are acquired through public registration from 9 to 11 of April 2012 at any bank or brokerage company and the maximum nominal value of each per individual is 15,000 Euros.

The selling price will be the price of the last bid accepted in the auction (cut-off price). The total amount of securities to be sold through this procedure will be announced after the end of the public registration.

Bond holders, opponents of debt "pruning", with an appeal to the Supreme Administrative Court

The first appeal of Greek government bond holders, opponents of the PSI, was filed in the Supreme Administrative Court, which will decide whether the actions of the government are legal and constitutional and how relevant they are. In particular, the two bond holders, who turned to the Supreme Administrative Court are seeking for the cancellation (as unconstitutional and illegal) of the following acts:

1) Council of Ministers enactment 5/24.2.2012, with which the PSI programme took place and for Greek bond holders who did not voluntarily participate in it (the specific enactment of the Council of Ministers refers to the start of the procedure for exchanging valuable securities and to determining the condition for their exchange).

2) Council of Ministers enactment 10/9.3.2012, which approved the decision of the bondholders to accept the exchange of securities. As a leader of the process the Bank of Greece confirmed this decision.

3) Decision of the Deputy Minister of Finance from 09.03.2012, which refers to the implementation of exchange of securities and the issuance of new bonds and securities of the Greek state.

n particular, the complaint was filed with the Supreme Administrative Court by two people: the sister of a 76-year-old widow, who owned Greek government bonds worth 433,000 Euros (included in the procedure for the exchange), as well as one retiree, who used to be a freelancer, who owned Greek government bonds worth 9,000 Euros.

The ones, who filed the complaints, claim that they allegedly suffered property damage from the cutting of the bonds value. The 76-year-old widow said she had lost 201,335 Euros, while the retiree said his property value decreased by 4,175 Euros. The complaint, filed on behalf of both, the administrative law teacher Panagiotis Lazaratos and lawyer Alexandros Likourezos, claims that " violated are the following provisions: Art. 1 (a form of government - democracy), Art. 4 (equality), Art. 17 (protection of property) and Art. 20 (judicial protection) of the Constitution and Art. 1 of the First Additional Protocol of the European Convention on Human Rights, which protects property and Art. 6 of that Convention, which guarantees right to judicial protection."

Complaints in Greek and European courts

The Association of individuals, who are holders of Greek government bonds (small creditors), declared its determination to address the European Court of Human Rights, as well as the Greek administrative courts with claims against the Greek political parties. In late April, the Association intends to submit to the Supreme Administrative Court for annulment all ministerial decisions, with which small bond holders were included in the PSI procedure against their will.

As emphasized at a press conference in Thessaloniki by the temporary manager of the Association Giannis Marinopoulos and professor of constitutional law at the University of Thessaloniki Costas Chrisogonos, the former finance minister Evangelos Venizelos had repeatedly assured that small creditors would be protected, but in practice nothing was done in this direction. Due to this reason, the Association stated that "we are ready to use all legal means within and outside Greece" and accused former Prime Minister Venizelos for not agreeing to meet with them. The Association is hoping that the promises made by Petros Christodoulou (Chairman of the Organization for government debt) and George Paleodimou (head of the Finance Minister Filippos Sahinidis’ office) to meet with Minister Filippos Sahinidis at the beginning of Holy Week will hold up.

Tags: Greece bond auction securities maturity treasury bonds
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