ATHENS Dec 11 Greek banks are expected to have
covered a shortfall in initial bids by the time Athens closes an
extended offer on Tuesday to buy back bonds as part of an effort
to cut debt and secure aid for its flagging economy.
Athens gave bondholders until 1200 GMT on Tuesday to tender
Greek debt after the amount offered by Friday's initial deadline
fell short of the targeted 30 billion euros.
The cut-price buyback's success is crucial to putting
Greece's debt back on a sustainable footing, which in turn
allows lenders to disburse aid to Athens.
Greek banks, who had only tendered about 60 percent of their
roughly 17 billion euros in sovereign debt holdings by Friday,
are expected to offer more to ensure the buyback hits its
targets, senior banking executives told Reuters.
"All banks will support the buyback, topping up their
offers," said one banker at a major Greek bank, who declined to
be named. "The target of 30 billion euros will be reached and
may be exceeded."
A total of 26.5 billion euros was tendered at an average
price of 33.4 percent of face value by the close of play on
Friday, a senior euro zone official told Reuters.
Euro zone finance ministers are also expected to discuss the
outcome of the bond buyback in a teleconference late on Tuesday
afternoon, after the extended deadline expires.
Greek lenders had initially been reluctant to put up their
entire holdings fearing losses over the long term, but now have
little choice but to do more since most of the aid unlocked by a
successful buyback will go to boosting the lenders themselves.
A second banker also said Greek lenders would have tendered
most of their bondholdings by Tuesday's deadline, which could
push the bids Athens receives over the 30 billion euros target.
"Banks will tender a significant amount of their
bondholdings in the buyback," that banker said.
"They will end up with small amounts left over in their
portfolios. The total amount offered in the buyback invitation
may reach 31-32 billion euros."
The buyback scheme calls for Greece to buy back debt worth
30 billion euros with 10 billion euros from foreign lenders at
prices well below their nominal value, cutting debt by a net 20
billion euros. That would account for half of a broader debt
relief package lenders agreed for Athens last month.
If the debt tendered exceeded the 30 billion euro target,
the debt agency may end up accepting the additional amount, said
a Greek government official who declined to be named.
"They will decide after the books are closed," the official
Athens had set a price range for the buyback at a premium to
market prices at the time. The range varied from a minimum of
30.2 to 38.1 percent and a maximum of 32.2 to 40.1 percent of
the principal, depending on the maturities of the 20 series of
Hedge funds, which bought the debt at rock-bottom prices
when it was feared the country would exit the euro, are
estimated to hold a large part of Greek debt and the offer was
seen as likely to earn them a tidy profit.