Greece places short-term debt despite downgrade

ATHENS: Greece placed 1.6 billion euros in six month bonds on Tuesday at only slightly higher yields despite a fresh ratings downgrade that evoked a higher risk the eurozone member would default.

The rate of return to investors rose to 4.96 percent, up from 4.88 percent paid in the last similar auction on May 10, with 3.2 billion euros in bids placed.

The auction followed a three-notch downgrade on Monday by Standard & Poor's of its Greece rating to CCC, warning of a significantly higher likelihood the struggling eurozone member would be forced to restructure its debt as part of a bailout in a manner that would constitute a default.

Eurozone finance ministers were set to meet on Tuesday to try to resolve a dispute over how to involve private investors in a second bailout package for Greece.

The country has been unable to affordably place long-term bonds on commercial markets since last year, which forced it to seek an initial 110 billion euro ($160 billion) bailout.

With little prospect it will be able to return to commercial lending markets soon, the EU and IMF are having to prepare a second bailout package to ensure it has sufficient financing through 2014.

Copyright AFP (Agence France-Presse), 2011