Athens - 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 €20bn.
Under the plan, Greece aims to cut its overall indebtedness
by spending €10bn from its rescue package to buy back about €30bn 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 eurozone 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."
Eurozone officials said the bloc hoped Greece would be able
to repurchase at least €40bn 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 November 23, Reuters data showed.
Greece's lenders agreed this week that the bonds, which have
a nominal value of €63bn, would not be purchased for more than the closing
price on that date. The offer goes in theory also to holders of about €4bn 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 November 23 closing prices, even a 50%
participation rate would be enough for a successful deal - in this instance,
Athens would have to spend just €8.7bn to buy back debt worth €31.5bn.
For Athens to spend €10bn, it would have to buy back around
60% of the outstanding bonds. This could save Greece €39bn gross on the face
value of the bonds and the interest payments due on them.
Athens has pressed its banks - which hold nearly €17bn 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
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 December 13 to receive
more than €30bn in bailout payments.
Greek pension funds holding more than €8bn 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."