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The interest rate on six-month bills jumped from 4.88% in May this year to 4.96% today, and the state earned around 1.63 billion euros. According to data provided by the Public Debt Management Agency, the bids received were generally worth 3.23 billion euros and the necessary amount was covered 2.58 times. In comparison to the previous auction of 26-week bills, the amount was covered 3.58 times. Non-competitive bids accepted are worth 375 million euros.
 
The Chairman of the Agency Petros Christodoulos told Reuters that foreign investors interested in Greek government securities were only 37% of all bidders this time. This is a significant fall in the interest of foreign investors, since foreign bidders of the Greek six-month bills in February 2011 had covered 80% of the amount sought at that time. The auction was held by primary dealers in the market and the closing date of the transaction is Friday, June 17. Under the rules regulating the activity of primary dealers, non-competitive transactions may reach 30% of the amount of the auction and the bids may be submitted by 12 pm on June 16 this year.

At the same time, the prices of the Greek government bonds and the insurance on them reached new heights after Standard & Poor's downgraded Greece to CCC last night.

Today, Greece's credit rating is one point lower than that of Argentina, Ecuador, Jamaica and Pakistan. The interest rate on ten-year Greek government bonds reached the incredible 17.46% from 16.88%. Standard & Poor's estimates that Greece’s foreign debt would be haircut in the range of 50% -70%. The agency remains adamant that the country would not avoid the collapse, regardless of the attempts to fill in the gap in state borrowing through the activation of the second financial support. S&P’s analysts estimate that the involvement of private investors in the restructuring of the Greek foreign debt would not be unnoticed and trigger a credit event.

This is exactly the problem that led to holding the extraordinary meeting of the council of the finance ministers from Eurogrop. Germany urges private investors to agree voluntarily to differed payments on Greek government bonds. The European Central Bank on the other hand, fears that this would be interpreted as a credit event, and regardless of the technical term that was imposed with the involvement of private owners of Greek government bonds, credit agencies would officially announce the collapse of Greece and the CDS-market would be activated.

The extraordinary meeting in Brussels did not reach to a final decision on how Europe would deal with the problems of the foreign debt of Greece, but the EU Economic Affairs Commissioner Olli Rehn said that the Council is close to taking a decision. He stated for a German media that the Commission considers the possibility to reach a voluntary agreement with banks to postpone their accounts receivable on bonds maturing in the next two years. The German Finance Minister Wolfgang Schäuble said he supports the second financial aid to Greece, if private investors are involved. The final version of the support is expected to become clear on June 23-24 this year, when the regular meeting of Eurogorup will be held. Until then, the Greek government should have adopted the mid-term recovery plan, which enters in parliament for final debate on Tuesday and is expected to cause much excitement

Meanwhile, the result of the implementation of the budgetary policy for the first five months of 2011 was announced and there are significant differences between what was planned and what is executed. The goals of the financial program were not achieved and the absolute value of the deficit now is 10.28 billion euros instead of the planned 9.07 billion euros. The increase is 13%. On the revenue side, the budget is behind by nearly two billion euros and by about 750 billion euros on the cost side. This result gave one more reason to intensify the speculation that the the cabinet restructuring is inevitable. It is informally argued in Greece that once the mid-term recovery plan is approved, the today's Minister of Finance Georgios Papakonstantinou will be replaced. Greek analysts do not exclude extraordinary elections to be held either.