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Greece had the deuce with the six-month T-bills worth € 1.3 billion

06 September 2011 / 18:09:30  GRReporter
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Greece gained € 1.3 billion after the auction of six-month T-bills with an interest rate of 4.8%. It dropped insignificantly compared with the previous auction in August this year, when the interest rate was 4.85%. The requested amount was covered 3.02 times, and according to the head of the Greek Public Debt Management Agency Petros Christodoulou, foreign investors were 31%. Primary market dealers held the auction and the settlement date is Friday, September 9, 2011. Under the rules for the activity of primary dealers, non-competitive bids may reach € 300 million and the y should be submitted until midnight on September 8, 2011.

The difficulty will be at the end of September, when a large part of the previous short-term government securities will mature and the Greek government will have to find around € 4 billion to repay its current debts. At the same time, there will be no decision taken on the payment of the sixth tranche of the financial aid to Greece until the supervisory Troika completes its inspection. The interrupted negotiations only aggravated the situation of the Greek government and the level of the interest rates on long-term government borrowing reflected the collapse of the investor confidence. The spread of ten-year Greek government bonds is higher than 1770 bps. This means that if Greece issues ten-year government securities today it will have to pay over 19% interest rate on them. The spread of two-year government securities is 5256 bps, and the insurances on them are close to the psychological border of 3000 bps.

Meanwhile, the President of the European Central Bank Jean-Claude Trichet and the German Finance Minister Wolfgang Schäuble were adamant that Greece should implement the measures set out in the austerity plan, because otherwise the aid would not be paid. "They should know in Greece that no different solutions are possible," said Wolfgang Schäuble quoted by Deutsche Welle. The German minister added that he understands the difficulties resulting from the cuts in the Mediterranean country and turning to the German audience, pointed out that the picture that the countries of the periphery have eased off is false. Schäuble was clear that after the return of the Troika in Athens in mid-September, the negotiations must be completed successfully because it is extremely important for all.

Jean-Claude Trichet insisted that the European Central Bank wants nothing more from Greece than what was agreed on July 21this year, but now even these targets seem difficult to be achieved. The Troika found serious delays and the budget earnings are still significantly less than the costs and there is no proper information on how it affects the deficit. He admitted that there are differences among the experts from the European Central Bank and the International Monetary Fund on the need to recapitalize the European banks, after the IMF assessment that the European financial institutions are lacking around € 200 billion to withstand a dramatic financial vicissitudes. "I am certain that the final assessment of the IMF will be different," said Trichet.

Tags: EconomyMarketsGreeceCredit agencyGermanyECBGovernment securities
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