Greece raises six-month €1.3 billion, rate falls

Greece raised €1.3 billion in a sale of six-month treasury bills yesterday, paying a slightly lower return of 4.8 per cent to investors, the debt management agency (PDMA) said.

“The total bids reached €3.02 billion and the amount finally accepted was €1.3 billion,” the debt management agency said.

The cost of borrowing the money inched lower from 4.85 per cent offered to investors in an equivalent sale in August, but still below the five per cent rate Athens borrows from the EU.

The issue, which had an original target of €1 billion, comes as top European officials are struggling to overcome differences in applying a new bailout of debt-plagued Greece agreed in July.

On July 21, the 17 eurozone countries agreed on a new rescue package for Greece, but Finland said that it would agree to back a portion of the loans only in exchange for some form of collateral.

A bilateral deal with Greece on cash collateral, announced August 16, fell apart after scathing criticism from several eurozone countries and appeared to put the bailout at risk.

Athens, which is struggling to apply its recovery programme under tight pressure from the EU and IMF, had hoped for parliamentary approval of the new package to begin this month in eurozone states after the summer break.

But Slovakia yesterday said it would not vote on boosting the eurozone’s rescue fund before December, thus delaying enactment of the fund until February.

A mission from the EU, IMF and the European Central Bank has suspended a quarterly audit of Greek finances, which is needed to unlock loan funds from a first €110 billion rescue loan extended last year.

The mission will be resumed when Greece has readied its draft budget for 2012 but Greek officials are already admitting that a greater-than-forecast recession will make it impossible for the country to meet its promised deficit targets.

The renewed concern about Greek public finances is a central factor in resurgent market pressures over the wider eurozone debt crisis.