Investors offer about $38.8 billion in Greek buyback: source

Mon Dec 10, 2012 5:22am EST
 
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By George Georgiopoulos

ATHENS (Reuters) - Greece is set to purchase back about half of its debt owned by private investors, broadly succeeding in a bond buyback that is key to the country's international bailout, a Greek government official said on Saturday.

Greek and foreign bondholders offered the targeted 30 billion euros ($38.8 billion) in the deal, which is central to efforts by Greece's euro zone and International Monetary Fund lenders to cut its debt to manageable levels.

"The buyback went well in broad terms. The amount offered by investors was within the range expected, about 30 billion euros," the official told Reuters on condition of anonymity. He did not provide more details.

No formal announcement is expected before Monday, another official told Reuters.

The buyback accounts for about half of a broader, 40-billion euro EU/IMF debt relief package for Athens agreed in November. The package broadly doubles the average maturity of its rescue loans to almost 30 years and cuts its interest rates by one percentage point to a level far below 1 percent.

Under its terms, Athens will spend up to 10 billion euros of borrowed money to buy back bonds with a nominal value of about 30 billion euros. This is nearly half the 63 billion euros of Greek debt held by private investors eligible for the plan.

Since the bonds are to be bought far below their nominal value, the country's net debt burden would fall by about 20 billion euros.

A successful buyback will ensure that the IMF, which contributes about a third of Greece's bailout loans, will stay on board of the rescue. It would also unlock the payment of 34.4 billion euros of aid later this month.   Continued...

 
An elderly man walks outside the Bank of Greece in Athens November 9, 2012. Picture taken November 9, 2012. To match Special Report GREECE-CRISIS/PENSIONS REUTERS/Yorgos Karahalis