Greek bond buyback likely to feature varied prices: source

Thu Nov 29, 2012 8:57am EST
 

By Lefteris Papadimas

ATHENS (Reuters) - Greece has yet to decide what price to offer bondholders under a debt buyback plan that is central to a bailout deal with international lenders, but the price is likely to vary depending on the bond, a Greek finance official said on Thursday.

Questions have arisen over whether Athens will attract enough interest from bondholders, who have the choice of whether or not to participate in a deal that is needed to ensure Greek debt is deemed sustainable in the coming decade.

The deal, clinched at the third attempt after weeks of wrangling, removes the biggest risk of a sovereign default in the euro zone for now, ensuring the near-bankrupt country stays afloat. The terms of the buyback will determine its success.

"It makes sense for it to happen in that way," the senior official told Reuters when asked if the 20 eligible Greek bonds would be offered at different prices rather than at a uniform price.

Still, the official said that the government had yet to finalize the terms of the buyback, which are expected to be announced next week. Under the plan, Greece aims to cut its overall indebtedness by buying back bonds for less than it would have to pay if its creditors held them to maturity.

Prices of Greek bonds eligible under the buyback ranged from 25.15 euro cents to 34.41 cents at the close of trading on November 23, according to Reuters data.

Greece's lenders agreed this week the bonds would not be offered at a price higher than the closing price on that date. The bonds have a nominal value of 63 billion euros.

Athens is expected to use 10 billion euros from its rescue package to buy back around 30 billion euros worth of debt, cutting its outstanding obligations by around 20 billion euros.   Continued...

 
Greek Prime Minister Antonis Samaras arrives at the presidential palace for a meeting with Greek President Karolos Papoulias in Athens November 29, 2012. REUTERS/John Kolesidis