Debt-ridden Greece raised euro1.2 billion in a heavily oversubscribed auction for 26- and 52-week treasury bills on Tuesday, the first debt sale since details were announced of a euro-zone and International Monetary Fund rescue package over the weekend.

But although investors flocked to buy the issues, the interest rate was punishingly high.

The Public Debt Management Agency said the yield for the 52-week bill stood at 4.85 percent compared to 2.2 percent for a 52-week issue sold in January. It was 6.54 times oversubscribed compared to 3.05 times in January.

The yield for the 26-week bills was 4.55 percent compared to 1.38 in a similar auction in January. That issue was 7.67 times oversubscribed compared to 4.87 in January.

Analysts say the relatively low figures involved - Greece’s total borrowing requirements for the year are around euro54 billion ($73 billion) - mean the auction should not be seen as a determining factor in the Greek debt drama.

“As the sum being sought is limited, I think the impression from the sale will be only of a psychological nature, it won’t really be substantial,” said Manos Chadzidakis, head of investment strategy at Pegasus Securities.

“If Greece succeeds in setting the result at the lower end of the estimated range - 4.6 for the six-month and 5.4 for the 12-month - I think it will be good news,” Mr. Chadzidakis said, speaking before the auction results were announced. “It will show that there is interest. But I don’t think this auction will be very decisive, the bigger sums are still ahead of us.”

The centre-left government says it has raised enough cash on international markets to cover its needs for April, but has to borrow around euro11 billion ($14.9 billion) next month.

Despite a sharp fall in Greek borrowing costs Monday, after the EU provided details on the lifeline package, the country is still having to pay way more than its euro-zone partners, to offset the perceived risk of its defaulting on its debts.

The spread between the yield investors demand on 10-year Greek government bonds and the benchmark German equivalent is around 3.5 percent, unchanged from late Monday.

Last week, the spread jumped to around 4.5 percent at one stage.

Keywords: Debt sale