Greece Sells T-Bills with Negative Interest for the First Time

Greek Stockmarket (EUROKINISSI/Yiannis Panagopoulos, FILE)

ATHENS – Greece borrowed money with a negative interest rate for the first time ever during Wednesday’s three-month T-bill auction.

The Public Debt Management Authority, in an announcement, said that the interest on the auction was set at -0.020 pct, with the Greek state raising 487.5 million euros from the market. Bids were 2.71 times more than the asked sum.

This development is yet another proof of the climate of credibility prevailing in international markets concerning the Greek economy, following the 1.5 pct yield set in a reopening of a 10-year Greek state bond on Tuesday.

2 Comments

  1. This has nothing to do with improve credibility of Greece..but the basic survival of the EU.

    Why the ECB has gone negative was nailed by Wolf Richter in a Sept. 18 article on WolfStreet.com.

    After noting that negative interest rates have not proved to be beneficial for any economy in which they are currently in operation and have had seriously destructive side effects for the people and the banks, he said:

    However, negative interest rates as follow-up and addition to massive QE were effective in keeping the Eurozone glued together because they allowed countries to stay afloat that cannot, but would need to, print their own money to stay afloat. They did so by making funding plentiful and nearly free, or free, or more than free.
    This includes Italian government debt, which has a negative yield through three-year maturities. … The ECB’s latest rate cut, minuscule and controversial as it was, was designed to help out Italy further so it wouldn’t have to abandon the euro and break out of the Eurozone.

    EU member governments have lost the sovereign power to issue their own money or borrow money issued by their own central banks. The failed EU experiment was a monetarist attempt to maintain a fixed money supply, as if the euro were a commodity in limited supply like gold.
    The central banks of member countries do not have the power to bail out their governments or their failing local banks as the Fed did for U.S. banks in 2008.

    Additionally, added bail in plan

  2. cont..
    When a bank ran into trouble, existing stakeholders–including shareholders, junior creditors and sometimes even senior creditors and depositors with deposits in excess of the guaranteed amount of €100,000–were required to take a loss before public funds could be used.

    The Italian government got a taste of the potential backlash when it forced losses onto the bondholders of four small banks. One victim made headlines when he hung himself and left a note blaming his bank, which had taken his entire €100,000 savings.
    Meanwhile, the bail-in scheme that was supposed to shift bank losses from governments to bank creditors and depositors served instead to scare off depositors and investors,and .worse, heightened capital requirements made it practically impossible for Italian banks to raise capital. Rather than flirt with another bail-in disaster, Italy was ready either to flaunt EU rules or leave the Union.

    The ECB f started buying government debt along with other financial assets. By buying debt at negative interest, it is not only relieving EU governments of their interest burden, it is slowly extinguishing the debt itself. All this to cover their corrupt vassal governments , like Greece!

    Why are investors buying these bonds which can never be held for long?:

    Investors are willing to pay a premium–and ultimately take a loss–because they need the liquidity that the government and high-quality corporate bonds provide, with no other options!t

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