Bills, but Prospects Are Dim
By DAVID JOLLY
sold a block of three-month securities on Tuesday, and at a lower interest
rate than many had forecast. But its long-term prospects worsened amid
skepticism that the country could pull itself out of a financial hole
without drawing on aid from the European Union and
the International Monetary Fund.
Public Debt Management Agency said in a statement that it had sold 1.95
billion euros ($2.6 billion) of 13-week Treasury bills. It said demand for
the bills exceeded the supply on offer 4.6 times, showing healthy demand.
While the 3.65
percent interest the government is paying is nearly a full percentage
point below what the most pessimistic analysts had predicted, it is more
than double the 1.67 percent it paid Jan. 19 in a similar auction. Last
week, the debt agency sold 52-week bills yielding 4.85 percent and 26-week
bills yielding 4.55 percent.
Greece has the
highest borrowing costs in the 16-nation euro zone. Market confidence was
dented last autumn when the incoming Socialist government of Prime
Minister George A. Papandreou announced that its predecessor had vastly
understated the scale of its financial problems.
While there was
little doubt in the market that Greece would be able to pull off a sale of
short-term debt, investors remain unconvinced that the government can
raise the roughly 10 billion euros it needs by the end of May. Greek
officials are to meet on Wednesday with teams from the European Union and
the International Monetary Fund to discuss aspects of a proposed aid
package of as much as 45 billion euros.
uncertainty, yields on the Greek government’s benchmark 10-year notes
rose eighteen-hundredths of a point to 7.85 percent, and the yield gap, or
spread, over comparable German notes rose to a record 4.76 percentage
points. That gap reflects the interest premium investors demand to hold
the riskier Greek debt.
risks to bond buyers, the government statistics agency said in Athens that
the unemployment rate rose in January to 11.3 percent, from 10.2 percent
in December. Economists fear that government austerity measures could lead
to a cycle of job losses and falling tax revenue, further narrowing the
state’s room to maneuver.