In staying with the once again popular trend of beating much lowered expectations (see Alcoa), Greece, which had previously decided against auctioning off 1 Year Bills for fear of lack of interest, managed to place €1.625 in 6 month bills in which local institutions purchased the bulk of the auction as foreign interest was muted. According to the PDMA who apparently still tracks the charade of ECB bailed out Greek banks recycling ECB money to then buy sovereign debt, the auction produced a yield of 4.65 percent for 26-week T-bills, up from 4.55 percent in a previous April 13 auction. The bid-cover ratio was 3.64 versus 7.67 in the previous auction.
Elsewhere, the ECB seems to have finally figured out that with it backstopping local banks of insolvent countries, there is increasingly little need to actually monetize sovereign debt. As a result the ECB only purchased an incremental €1 billion in government bonds in the prior week. The resulting weekly Term Deposit Tender to remove the excess liquidity, saw 85 banks placing bids totaling €98.288 billion today, or a 1.6 Bid To Cover. This compares to last week's 1.5.
Lastly, when looking at European liquidity, the ECB allotted €195.7 billion to its Main Refinancing Operation to 147 bids, As a result of the operation, the eurozone saw a net drain of €33.4 billion after the ECB allotted €229.1 billion in its 7-day MRO last week.