Greece Pays Higher Yields at Auction
By EMESE BARTHA
Greece on Tuesday had to pay a higher yield than a month ago to sell a significantly lower-than-usual amount of 26-week T-bills at auction as investor nerves over the euro zone's periphery kept the market on edge.
"The most recent jitters in the euro government bond market have pushed the likely re-entry point of Greece to the bond market further into the future," said Jan von Gerich, senior analyst at Nordea in Helsinki. On the positive side, he said, Greece is keeping "at least some contact to the market."
The auction took place amid mounting concerns from investors about Ireland and Portugal's ability to bring their public finances under control, which, coupled with fears of subdued economic growth, repeated the pattern of the past few days by pushing their yields to fresh highs Tuesday.
In contrast, Greek spreads reversed from previous widening Monday and were flat early Tuesday, after the ruling Socialists won local elections Sunday in most of Greece's regions, averting the possibility of snap elections.
Greece, which accepted a €110 billion ($153.15 billion) bailout in May in exchange for severe austerity measures, offered €300 million of the T-bills and sold €390 million, including a 30% noncompetitive tranche, in line with Greek auctioning rules.
The Greek Public Debt Management Agency paid a uniform yield of 4.82%, compared with 4.54% a month ago. The bid-to-cover ratio came in at a spectacular 5.15, compared with 4.22 last month but the overall demand of €1.544 billion was much lower than in previous auctions, although the offer size was also smaller.
"The T-bill auction was successful with good coverage despite the backdrop of negative market conditions," said a local senior bond trader. "It was logical that the yield would come in higher, but 4.82% is still impressive, given recently rising spreads across the Greek yield curve and all of the euro-periphery."
The yield is just below the 5% the country is paying on its loans in its bailout package. The higher yield at the auction was in line with expectations and analysts said the successful Greek sale won't be a game changer. A London-based trader said late Monday evening that given the rather symbolic T-bill offer size, a yield above 5% wasn't out of the question either. WestLB analysts, meanwhile, said pre-auction Tuesday that even a successful Greek T-bill sale is "unlikely to stabilize spreads."
While Ireland is off from the primary markets for the rest of this year, Portugal will auction up to €1.25 billion bonds Wednesday, likely being forced to pay record yields of near 7% on the 10-year bond to investors, which is considered unsustainable from Portugal's funding aspects.
Citigroup said Monday it was "very concerned" that the negative mood in the euro zone's peripheral markets "will feed upon itself," and in Citi's view, it isn't economically viable for either Ireland or Portugal to fund "anywhere near prevailing levels."
The Greek debt agency will be able to sell another 30% of the auction amount, or €90 million, in a second day noncompetitive round Thursday, which may bring the total amount raised to €480 million.
Greece Pays Higher Yields at Auction - WSJ.com
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Considerazioni intorno all'esito dell'Asta.
La prossima settimana Bot/Greek a sei mesi, più importanti.
Poi si passerà a dicembre.
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