Factbox: French banks' options for Greek bondholders
(Reuters) - French banks have put together a two-pronged plan for holders of Greek government bonds to roll over their holdings as they mature, in the first concrete proposals laid out by private investors to help Greece avoid a default.
Below are details of the two rollover options put forward by French banks, which are among the biggest holders of Greek sovereign bonds along with their German peers:
KEY FEATURES OF THE PLAN
* A voluntary mechanism
* Would avoid triggering a credit event, and a payout from credit default swaps/insurance contracts held against the bonds
* Flexible: Bondholders can pick and choose which option suits them best
* Not all bondholders have to take part for Greece to raise the 30 billion euros ($43 billion) it needs
ROLLOVER OPTION ONE - 30-YEAR, GUARANTEED BONDS
This would extend Greek debt for far longer than any current bailout package. Banks/bondholders would have the safeguard of a guarantee and potentially receive higher interest payments than the European Union is getting from its Greek financing package.
It is the "credit-enhanced" option.
* Bondholders would have to reinvest at least 70 percent of the principal amount they receive on maturity
* Would switch into new 30-year bonds pay 5.5-8.0 percent annually, depending on Greek GDP growth
* New bonds would be guaranteed by AAA-rated, zero-coupon bonds held in a special purpose vehicle
* Bonds would be listed but trading would be restricted until January 2022
ROLLOVER OPTION TWO - 5-YEAR BONDS WITH NO GUARANTEE
This would tie bondholders down for less time but require them to roll over more of the Greek debt they hold. It may not pay as much and is not guaranteed.
This is the "vanilla" option."
* Bondholders would have to reinvest at least 90 percent of the principal amount they get back on maturity, and preferably 100 percent
* New bonds would pay 5.5 percent, or similar to the interest rate on Greece's borrowings from the European Union
* Bonds would be listed but trading restricted
The proposals were laid out in a draft document from the French Banking Federation obtained by Reuters, and which can be seen in full on: r.reuters.com/weh42s ($1 = 0.705 euro)
(Reporting by Sarah White)
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