Greek Auction to raise money to pay debt

Greece, starved of financing options, will step up its treasury bill issuance on Tuesday, offering an unusually large amount so it can meet looming redemptions on Aug. 20 and fund its cash needs until it secures further aid from its international creditors. The auction, which could raise up to €5 billion ($6.15 billion), is likely to meet decent demand despite Greece's precarious government finances, because this short-term debt is accepted as collateral by the European Central Bank. Greek banks, keen to access ECB emergency facilities, are likely to snap up the new paper. The Greek Public Debt Management Agency said it would auction €3.125 billion of 13-week treasury bills next week. Two noncompetitive auction rounds, if exercised to the maximum allowed amount, could bring the total to €5 billion. The country sold 26-week treasury bills this week, through which it raised €1 billion. Greece was left with no options other than to increase its auction sizes after its euro-zone partners declined to provide it with a bridge loan until a disbursement of crucial aid in coming months. Greece is in talks with international creditors—the European Union, the International Monetary Fund and the ECB—on a package of new austerity measures of €11.5 billion, a requirement for Greece to receive its next €31 billion aid installment. A decision by creditors on whether the country is eligible for the funds won't be made until October. Raising €5 billion next week would allow Greece to repay creditors and meet general financing needs. Greece must repay €3.1 billion of debt on Aug. 20, mostly to the ECB. According to RBC Capital Markets analysts, €670 million of coupon payments add to its payment duties.

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Write to Emese Bartha at emese.bartha@dowjones.com