ATHENS, Greece — Bailed-out Greece passed a new market test in its struggle to overcome its debt crisis, raising euro650 million (US$865 million) yesterday through a heavily oversubscribed treasury bill auction — its second this month.

The sale came as the government sought to play down remarks by Deputy Prime Minister Theodoros Pangalos that Greece could consider extending repayment of its overall debt, beyond the euro110 billion (US$146 billion) in rescue loans that are keeping the country afloat.

The public debt management agency said the yield from the sale of 13-week treasury bills was set at 4.10 per cent — the same as in Greece’s last similar issue, in November. The auction was nearly five times oversubscribed, showing strong investor demand.

Last week, Greece raised euro2.4 billion (US$3.19 billion) in a 26-week treasury bill auction, which carried a steep yield of 4.9 per cent.

Yesterday’s sale was seen as a test of market sentiment for the troubled eurozone country, which narrowly avoided bankruptcy last year with the rescue loans from European countries and the International Monetary Fund. To secure the three-year package, the Socialist government took deeply unpopular austerity measures, cutting pensions and salaries while raising taxes and retirement ages — amid a sharp recession and growing unemployment.

Greece has said it expects to be allowed to delay repayment of these loans, thus avoiding a steep accumulation of maturing debt as it struggles to rein in a runaway deficit, reduce a debt expected to exceed 150 per cent of gross domestic product and revive the shrinking economy.

In an interview broadcast early yesterday, Pangalos said he favoured an extension of Greece’s debt “not just the euro110 billion, but the debt as a whole.”

He added: “You might ask me: ‘isn’t that restructuring?’ It is, technically, but in the sense that there is never any doubt of our obligation to pay back the debt, and to pay back everything we owe.”

But government spokesman George Petalotis insisted Pangalos voiced “a personal opinion.”

“Naturally, there is no issue of extending the repayment of Greece’s overall debt,” he said. “There is a decision in principle on extension of the repayment of the euro110 billion, and the government is not discussing anything beyond that.”

The country’s credit rating has been repeatedly downgraded over the past year, with its bonds now assigned non-investment — or junk — status by all three major ratings agencies.

Greece began treasury bill sales in September to maintain a presence in the market after its financial crisis blocked it out of the long-term debt market, with investors insisting on prohibitively high interest rates for its bonds.

Yesterday, the rate demanded for Greek 10-year bonds was around 11 per cent, 8.2 percentage points more than for the benchmark German bonds of the same maturity.

Greece has said it hopes to return to bond markets some time this year.