Greece extends buyback offer to reach 30 billion-euro target

Mon Dec 10, 2012 9:23am EST
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By George Georgiopoulos and Jan Strupczewski

ATHENS/BRUSSELS (Reuters) - Greece extended its offer to buy back debt until Tuesday, seeking more bids from bondholders after falling short of a target to retire bonds worth 30 billion euros at a cost of just 10 billion euros.

The buyback is designed to provide for about half of a 40-billion euro debt relief package for Athens agreed last month by the European Union and International Monetary Fund.

Its success is crucial to ensuring Greece's debt is put back on sustainable footing and - more immediately - to unlocking badly-needed aid for the country.

Despite the initial lack of investor interest, the scheme is expected to ultimately hit its targets since Greek banks - whose own fate depends on a successful buyback - are expected to stump up the shortfall.

A total of 26.5 billion euros was tendered at an average price of 33.4 percent of face value when the offer expired on Friday, a senior euro zone official told Reuters. <ID:L5E8NA6DV>

That would mean Greece would still have 1.15 billion euros left over from the 10 billion euros it was allotted to spend to retire outstanding debt. Assuming the same average price, it could buy an extra 3.5 billion euros worth of bonds.

Greece's debt agency extended the offer to 7 a.m. EDT on Tuesday following Friday's deadline.

"The aim is to reach the 30 billion euro target on the face value of debt to be bought back," said a government official, who declined to be named, adding the aim was to use all of the 10 billion euros given by lenders for the buyback.   Continued...

An elderly man walks outside the Bank of Greece in Athens November 9, 2012. REUTERS/Yorgos Karahalis