Euro zone central banks may roll over Greek bonds

Wed Nov 28, 2012 12:46pm EST
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By Jan Strupczewski

BRUSSELS (Reuters) - Euro zone central banks might roll over their Greek debt holdings to cut by 5.6 billion euros the amount governments will have to provide Athens by 2016, according to a document that emerged from this week's euro zone finance minister's meeting.

Such a move would cut the amount required to just 2 billion euros from 7.6 billion, the document showed, which should increase the likelihood that the Greek deal will be accepted by bailout-weary national euro zone parliaments.

A senior euro zone official with knowledge of the issue said that while talks were ongoing, no decisions had yet been taken.

International lenders - euro zone countries, the European Central Bank and the International Monetary Fund - agreed early on Tuesday on a debt reduction plan for Athens that would bring Greek debt to 110 percent of GDP in 2022, down from almost 190 percent expected for next year.

According to the document, Greece would need to get 1.8 billion euros in extra financing in 2012-2014 and another 5.8 billion between 2015 and 2016.

But it said that if the euro zone's 17 national central banks, which together form the Eurosystem, decide to replace the Greek bonds they hold with new Greek paper as the debt matures, it would save Greece the need to redeem 3.7 billion euros in 2012-2014 and 1.9 billion euros in 2015-2016.

It lists the item of "roll-over of ANFA holdings" - a term to describe central banks' investment portfolios - in parenthesis, stating in a footnote that the amounts are tentative and subject to national central banks' approval.

The European Central Bank declined to comment on the issue.   Continued...