By Lefteris Papadimas
ATHENS Dec 3 Greece will unveil details of a
bond buy-back crucial to efforts by foreign lenders to trim the
country's ballooning debt, hoping the terms will draw enough
investors and unblock vital aid.
Since plans for the buy-back were announced on Tuesday,
questions have swirled about whether it will tempt enough
bondholders to cut Greek debt by a net 20 billion euros.
Under the plan, Greece aims to cut its overall indebtedness
by spending 10 billion euros from its rescue package to buy back
about 30 billion euros of bonds for less than it would have to
pay if its creditors held them to maturity.
A senior government official said Athens would unveil the
terms of the deal on Monday before a meeting of euro zone
finance ministers, at which Greek minister Yannis Stournaras
would brief his counterparts.
"There will be a debriefing by the Greek minister on the
steps he will have taken by then," said a senior EU official.
"On Monday you will see it all."
Euro zone officials said the bloc hoped Greece would be able
to repurchase at least 40 billion euros of its own bonds.
The price that Athens will offer bondholders is likely to
vary depending on the bond rather than be a uniform rate for all
holders, a senior Greek finance official has told Reuters.
On the secondary market, Greek bonds eligible under the
buy-back ranged from 25.15 to 34.41 cents in the euro at the
close of trading on Nov. 23, Reuters data showed.
Greece's lenders agreed this week that the bonds, which have
a nominal value of 63 billion euros, would not be purchased for
more than the closing price on that date. The offer goes in
theory also to holders of about 4 billion euros of old Greek
bonds, who refused to take part in a debt cut scheme in March.
A Reuters calculator on the buy-back shows that if the
buy-back price was set at the Nov 23 closing prices, even a 50
percent participation rate would be enough for a successful deal
- in this instance, Athens would have to spend just 8.7 billion
euros to buy back debt worth 31.5 billion euros.
For Athens to spend 10 billion euros, it would have to buy
back around 60 percent of the outstanding bonds. This could save
Greece 39 billion euros gross on the face value of the bonds and
the interest payments due on them.
Athens has pressed its banks - which hold nearly 17 billion
euros of the bonds - to take part in the deal, saying it was the
"patriotic duty" of Greeks to ensure the buy-back is a success.
"The buy-back must succeed. It's our patriotic duty to
succeed, it is important for the country's credibility,"
Stournaras said last week.
Despite fears that Greek banks - already battered by the
country's deep economic crisis - would be forced to book losses
from the buy-back there have been growing indications they are
likely to participate.
Prime Minister Antonis Samaras said Greek banks would
benefit from the voluntary debt buy-back - which is crucial to
unlocking aid that will largely be used to recapitalise them -
since they held Greek bonds at lower prices on their books.
"They won't lose any of their capital but will end up with
more liquidity," he was quoted as saying in an interview with
Sunday's Proto Thema newspaper.
The deal is seen as a golden opportunity for hedge funds
which have bought the bonds at rock-bottom prices.
Athens must complete the buy-backs by Dec. 13 to receive
more than 30 billion euros in bailout payments.
Greek pension funds holding more than 8 billion euros of the
bonds will not take part, Samaras said.
"The debt buy-back does not concern the pension funds," he
said. "We wouldn't erase the debt even if we took the funds'
bonds. These are seen as arrears of the state to itself."