BRUSSELS/LONDON (Reuters) - Four options will be offered to Greece’s private sector creditors to contribute to the government’s bailout, including debt exchange and rollover plans as well as a bond buyback scheme, the leading bank lobby group said.
The Institute of International Finance on Thursday said the bond exchange would help reduce Greece’s debt pile by 13.5 billion euros, and by offering a menu of new instruments it aims to attract 90 percent investor participation in the plan.
It said this would provide financing to Greece of 54 billion euros from mid-2011 to mid-2014 and a total of 135 billion euros from mid-2011 to end-2020.
The net private sector contribution would amount to 17 billion euros, according to a separate document seen by Reuters earlier.
Greece’s debt profile will be improved substantially with the exchange and roll-over program extending average maturities of privately held claims from 6 to 11 years, the IIF said.
In addition to the private sector plan, Greece’s debt will be cut by “potentially much more through a debt buyback program that is to be defined by the official sector,” the IIF said.
“This offer is part of a comprehensive package which involves a balance of interest for all parties,” said Josef Ackermann, IIF chairman and the head of Deutsche Bank. “The private investor community will benefit from a more stable financial and economic environment,” he said.
Banks agreeing to participate include Deutsche Bank, HSBC, BNP Paribas and insurer Allianz.
The debt exchanges, lending and rollovers will take place at rates that are broadly comparable to that being extended by the EU and the new instruments will have significantly longer maturities of up to 30 years, the IIF document said.
The four instruments involve a bond exchange at par into a 30-year instrument; a bond offer at par involving rolling-over maturing Greek government bonds into 30 year instruments; a discount bond exchange at 80 percent of par into a 30-year instrument; and a discount bond exchange at 80 percent of par into a 15-year instrument.
The interest on the first two instruments is equivalent to a fixed rate of 4.5 percent, on the third it is 6.42 percent and on the fourth it is 5.9 percent.
Reporting by Luke Baker and Steve Slater