LONDON (MNI) – There is no obstacle to Greece issuing T-bills to
repay E4.35 billion of short-term government paper due for redemption in
July, but there should be no reason for Athens to do so, the European
Commission said Tuesday.

Earlier today, a Reuters report citing a source “close to the
process” said Greece will seek to raise funds from markets in July in
order to cover the payment.

“Greece will receive tranches of aid every quarter, which should
cover all of their financing needs,” a European Commission spokesperson
told Market News International. “Any additional funding is not
foreseen.”

The idea of returning to the market “sounds strange, but it is
possible; they are allowed to do that,” said. “It may be expensive and
they’ll just have to explain why they’re doing that to their parliament
and the Greek people.”

Greece received its first tranche of aid from fellow Eurozone
states totaling E14.5 billion on May 18, and E5.5 billion from the
International Monetary Fund was disbursed on May 12. This was part of a
support mechanism totaling E110 billion for Greece agreed with Eurozone
and the IMF under the three-year economic and financial policy program.

“These disbursements cover the immediate and short-term financing
needs of the Hellenic Republic,” Greece’s Ministry of Finance said at
that time.

Greece is due to pay E1.95 billion in two payments due 16 July and
a single payment of E2.4 billion due 23 July.

The E110 billion emergency funding programme was designed to cover
Greece’s financing needs until the end of Q1 2012.

Any T-bill issuance in 2010 would also contradict previous
statements by Greece’s finance minister George Papaconstantinou.

Earlier this month, Papaconstantinou told the Financial Times that
the EU/IMF programme should act as a shield, but also help Greece return
to markets as soon as possible.

“It’s unlikely this year, the amount available to us is such that
we don’t have to go back to the markets until the first quarter of
2012″, he said.

However, a senior government source emphasised to Market News that
that no one has said that Greece either must, or will, stay away from
markets.

Indeed, with three-month bill rates currently 4.53%, Athens could
theoretically borrow in this segment and pay slightly less than for the
Eurozone. This would evidently surprise the markets but perhaps in a
positive way.

In April, Greece comfortably raised E1.95 billion in a sale of
three-month T-bills, but yields had more than doubled to 3.65% from
1.67% in January.

— London newsroom, William Wilkes: william.wilkes@ntkn.com;
Nick Shamim: nshamim@marketnews.com

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