- ATHENS: Greece raised €1.625 billion ($2.28 billion) in an auction of treasury bills on Tuesday, though the higher interest rate it has to pay revealed investor unease a day after the country’s credit rating was downgraded sharply.
The sale, originally for €1.25 billion in 26-week bills, had a yield of 4.75 percent, up from the 4.64 percent interest rate for a similar auction on Feb. 8, the Public Debt Management Agency said.
The auction was 3.59 times oversubscribed, compared with 4.59 times in February.
Tuesday’s sale came after Moody’s slashed the debt-ridden country’s junk rating by three notches to B1, prompting a furious riposte from the Greek government, which described the move as “completely unjustified.”
“Ultimately, Moody’s downgrading of Greece’s debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy,” the finance ministry said. It claimed the agencies were trying to make up for failing to predict the 2008 global financial crisis.
Debt-ridden Greece began treasury bill sales last September to maintain a presence in the market after its financial crisis blocked it out of the long-term debt market, with investors insisting on prohibitively high interest rates for its bonds.
The country has been saved from bankruptcy by a €110 billion ($154 billion) three-year bailout loan package from the other EU countries that use the euro and the International Monetary Fund. Under the conditions of the deal, Greece has been implementing a raft of unpopular austerity measures — including public sector pay cuts, an overhaul of the pension system and tax hikes — and is being closely supervised by the IMF and EU.
Greece was the first eurozone country to need a bailout, and has since been joined by Ireland. Athens hopes to negotiate lower interest rates and extensions in the repayment schedule for the loans. The EU may offer such concessions as part of a comprehensive solution to the debt crisis expected to be unveiled a March 25 summit in Brussels.
Prime Minister George Papandreou began meetings with opposition leaders Tuesday ahead of the summit, seeking support at home for what he has described as a national effort to pull the country out of its financial crisis.