* Greece faces 20 bln euros of redemptions in April, May
* Delaying next bond in the hope that spreads will fall
* Default very unlikely, govt could turn to bilateral aid
By George Georgiopoulos
ATHENS, Feb 12 (Reuters) - Even if EU leaders put some flesh on the bones of their vague promises to support Athens next week, Greece still faces a race against time to win back market confidence to fend off a financing squeeze looming before June.
Pledges of political support for debt-strapped Greece at a Brussels summit on Thursday included no details of a possible rescue plan and failed to calm bond investors' nerves ahead of a heavy issuance period for Athens.
Greece, which has around 7 billion euros in Treasury coffers, faces two large bond redemptions of about 20 billion euros ($27.5 billion) in April and May. The EU package, which may be fleshed out when EU ministers meet next week, will not alone be enough to win investors' goodwill.
"The big challenge for Greece is to satisfy markets and the other euro zone members that no slippage is taking place in its fiscal plans," said Justin Knight, strategist at UBS.
Markets appeared willing to lend money to Athens as recently as Jan. 25, when a 5-year bond, the government's first sale this year, raised a heavily oversubscribed 8 billion. But Greece was forced sell the debt at a steep yield of 6.1 percent.
This not only adds to budget strains but risks choking a recovery as banks pass on higher interest rates in loans to households and businesses.
Greece has borrowed just 13 billion euros of the 53.2 billion euros its needs for 2010 and its next sortie will be a 10-year bond issue planned for this month or March. The debt agency delayed the bond in hopes an EU deal would lower yields.
The plan seemed to be working. The yield spread of 10-year Greek bonds over bunds tightened sharply a euro lifetime high above 400 basis points last month on hopes for an EU bailout.
But Greek spreads widened again on Friday and the euro currency weakened as investors fretted that political opposition in EU powerhouse Germany would dilute any resue deal and worse-than-expected Greek GDP data spooked the market.
NO BOND BEFORE MARCH
One treasurer at a major Greek bank, who asked not to be named, said he did not expect the government to return to the market before wage and tax measures announced this week were passed into law this month, despite strong union opposition.
Prime Minister George Papandreou has received EU support on the back of his ambitious plan to slash Greece's deficit from 12.7 percent of GDP last year to below the EU ceiling of 3 percent by 2012.
"What's needed is time for markets and the EU to see the outcome," the bank treasurer said. "Before March, it will be too early to tell."
But Greece's unions are spoiling for a fight. After a 24-hour strike on Wednesday, public sector union ADEDY has pledged to escalate action to force a government back-down. And with Greece's debt due to top 120 percent of GDP this year, its fiscal problems will not disappear without tough action.
"It is a race against time to gain market confidence," said Millennium Bank Treasurer Panagiotis Dimitropoulos, adding he was confident spring debt issues would be covered.
Greece is fortunate that its debt profile has a relatively long maturity compared to other euro zone countries, a big helping hand in the current debt crisis. At 7.8 years, its debt duration is the second longest in the euro zone.
With a debt mountain approaching one-third of a trillion euros, having to roll over a bigger chunk than the 30.2 billion in redemptions this year would have spelled much deeper trouble.
"Our long maturity profile and low rollover ratio are advantages, giving us significant breathing space," said a Greek debt agency official who did not want to be named. "After we cover the maturities in April and May, it'll be an easier ride."
Greece has said it will adopt a flexible strategy this year, feeling out the market and weighing options including more T-bills, private placements of floaters and syndicated deals.
"Greece must go out and borrow whenever it sees a window of opportunity. It will have to accept the cost," Dimitropoulos said. "With very short-term issuance you may get lower costs but you increase liquidity risk."
For a FACTBOX on Greece's debt profile click