Worries over Greece "might" be taking a breather if today's debt auction can serve as indicator. The cost of financing its short-term debt dropped, even though it should be noted that demand also diminished.

DEBT AUCTION:
Athens sold €1.625bn in 13-week bills with the yield moving down to 4.24%, from the prior 4.31%.

The bid-to-cover ratio however slipped to 1.90 from the previous 1.98. As a rule of thumb, 2.0 is generally considered to be a "successful" auction with aggressive demand.

BUDGET CUTS AND PRIVATIZATIONS:

Greek politicians continue immersed in discussions with the Troika (representatives from the European Commission, the International Monetary Fund and the European Central Bank) over the €13.5bn in austerity measures to be taken in order to comply with the bailout agreement.

Finance minister Yannis Stournaras admitted yesterday that he doesn't expect a deal to be reached in time for the European summit on Thursday, dashing slim hopes that EU leaders would be able to at least examine the proposals stamped with the Troika's approval.

Chief of the country's HRADF agency (which controls the privatisation process of state assets), Yannis Emiris, assured at a conference yesterday that "we have some very significant assets and tenders to launch in the next few months". These assets would include oil refiner Hellenic Petroleum, utility company Thessaloniki Water as well as Greece's two largest ports. Under the bailout agreement, Greece is expected to divest €19bn in public assets by 2015 and nearly €50bn by 2020.

Emiris noted that the sales programme should also create about €60bn in investments, 50,000 jobs and about €3bn in yearly tax revenues. It would also increase GDP by 1% on an annual basis, according to the HRADF head.

"GROWTH", BETTER; UNEMPLOYMENT, WORSE:

Athens did receive some positive news on its economy yesterday: IOBE (Greek foundation for economic and industrial research) lowered its forecast of a contraction this year to -6.6% from the -6.9% that it had pointed out in its previous quarterly report.

However, expectations for the unemployment rate for 2012 were raised to 24.2%, from the prior 23.6%.

HELP FROM ABOVE:

Additionally, the IOBE predicts that Greek debt will begin declining in 2013 while its Vice President Raphael Moissis gave a "positive" outlook: "Greece will be able to service its debt around the end of the decade and without any further assistance by its creditors, besides some practical help that is common in such circumstances," he said.

In any case, German Chancellor Angela Merkel gave a rare show of support yesterday when she said that she would not allow Greece to go bankrupt. Merkel has been the most insistent of the European leaders in requiring that Athens comply with the terms of the bailout.

JM

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