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ATHENS, March 4 (Reuters) - Greece raised the amount it sought to refinance maturing short-term debt on Wednesday, but at the highest yield for 11 months in a closely watched sale of T-bills that tested its ability to raise funds amid a cash crunch.
Shut out of debt markets and with aid from its official creditors frozen, Athens is scrambling to meet this month's funding needs, which include maturing treasury paper and a 1.5 billion euro loan payment to the International Monetary Fund.
The country's debt agency PDMA sold 1.138 billion euros ($1.27 billion) of six-month Treasury bills on Wednesday but at a higher cost than in a similar auction last month.
The T-bills were priced to yield 2.97 percent, up 22 basis points from 2.75 percent in the previous February sale and the highest since an issue in April 2014 yielding 3.01 pct.
The sale's bid-cover ratio was 1.30, unchanged from the previous sale in February and showing no deterioration in demand despite tight liquidity conditions.
The amount raised included 262.5 million euros in non-competitive bids. The settlement date for Wednesday's auction will be March 6, when 1.4 billion euros of a previous six-month T-bill issue matures.
Greece also must raise 1.6 billion euros in an auction for another maturing issue of three-month T-bills on March 13.
Issuing T-bills is the only source of commercial borrowing for the leftist government of newly-elected Prime Minister Alexis Tsipras, which has yet to be given any extra leeway by its EU/IMF lenders to finance itself through T-bill issues.
Athens has already hit a ceiling of 15 billion euros in outstanding T-bills set by the lenders.
The government has asked for the ceiling to be raised as foreign investors have increasingly fled its sales in recent months but euro zone partners have refused so far on fears that it would be tantamount to central bank financing of governments.
At least part of the state's cash needs for the month will be met by repo transactions in which pension funds and other state entities sitting on cash lend the money to the country's debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials told Reuters on Tuesday.
(1 US dollar = 0.8985 euro) (Reporting by George Georgiopoulos, editing by Deepa Babington and Toby Chopra)