UPDATE 1-Greece confident T-bill rollover will go smoothly

Mon Nov 12, 2012 5:59am EST

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By George Georgiopoulos

ATHENS Nov 12 (Reuters) - Greece expects Tuesday's issue of one-month and three-month treasury bills to refinance a 5 billion euro issue maturing on November 16 to be fully funded, a senior debt agency official said on Monday.

"We are very confident the issue will be rolled over without any problem," the official told Reuters. "We have liaised with the ECB regarding the ceiling on the outstanding stock of T-bills and there is no problem."

The official's assurances followed a report in the Financial Times that said Greek banks expected to buy the issue could raise only about 3.5 billion euros of collateral acceptable to the European Central Bank.

Monthly T-bill issues are Greece's sole source of market funding after it was shut out of bond markets in 2010 because of prohibitive borrowing rates. Athens issued the maturing three-month T-bills in August to pay a Greek government bond that was held by the ECB.

On Tuesday its debt agency (PDMA) will auction one-month and three-month T-bills to roll over the maturing August issue which had been priced to yield 4.43 percent.

To refund it, PDMA will sell 1 billion euros of three-month paper and 2.125 billion euros of one-month T-bills. It will also accept non-competitive bids for up to 60 percent of the amount auctioned, which will bring total proceeds to 5 billion euros.

Banks, which traditionally buy the bulk of the T-bill issues, can fund them by putting them up as collateral in the Greek central bank's so-called ELA (emergency liquidity assistance) window, which the ECB has oversight of as part of the euro system.

The heads of treasury at two banks also told Reuters they expected the debt agency's issue to be covered on Tuesday.

"I don't see a problem tomorrow," said one of the treasurers, who wished not to be named.

Funding at ELA is costlier than borrowing from the ECB, which stopped accepting Greek paper as collateral for loans until a troika assessment on the country's economic adjustment performance is released.

Greece's outstanding stock of T-bills is currently at 18 billion euros, above a 12 billion euro target that was set in March, the debt agency official said.

Earlier this month, PDMA sold 1.3 billion euros of six-month T-bills to refinance maturing paper, with the yield easing by 5 basis points to 4.41 percent.

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