Greece T-Bill issue oversubscribed after European Union backup

Greece raised €1.56 billion in an oversubscribed Treasury Bill issue that came after an EU backup pledge on its debt over the weekend, authorities said.

The Greek public debt management agency said the issue of six-month and one-year bills attracted bids of €4.6 billion and €3.9 billion, and the state had decided to accept €780 million on each batch.

Greece had originally planned to raise a combined €1.2 billion via the T-Bills, which are usually issued by governments to cover short-term financing needs.

The rate Greece had to pay investors, however, remained very high for this short-dated debt paper although the levels were a solid improvement on recent market quotes.

The yield or interest rate paid on the six-month bill will be 4.55 per cent and higher at 4.85 per cent on the one-year bill.

The last time Athens offered a six-month T-Bill, in January, the rate was 1.38 per cent with 2.20 per cent paid on the one-year paper.

The loan drive is Greece's first after its eurozone partners on Sunday offered to lend Athens €30 billion this year at a preferential rate below market quotes in order to calm fears of a default.

Greece's total debts were last tallied at about €300 billion.

Athens has to find around €11.5 billion by next month, part of about €54 billion needed for all this year to cover debt and budget needs.

Greek Prime Minister George Papandreou on Monday did not rule out use of the rescue mechanism but noted that a decision to activate it would take "some time" and would depend on a variety of factors, not just borrowing costs.

"We effectively now have a mechanism which exists, in detail, regardless of whether we activate it or not," the PM told reporters during a visit to Cyprus.

"We can activate it at any given moment. That is to be evaluated, which cannot happen in a day, it will take some time to evaluate if we need to activate it, and of course this will be linked to various factors, not just spreads." The gap, or spread, between Greek and German 10-year bonds last week soared to a record high point but on Monday declined after details of the EU support mechanism became known.