Official: Investors offer Greek debt buyback

ATHENS: 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 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 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 of borrowed money to buy back bonds with a nominal value of about €30 billion. This is nearly half the €63 billion 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.
Athens badly needs that money to refloat its ailing economy by replenishing the capital of its cash-strapped banks and settle arrears with government suppliers.
The EU and the IMF have been withholding rescue payments to Greece for six months because it had fallen short of promises to shore up its finances, privatize and make its economy more competitive.
Athens has received €148.6 billion euros in EU/IMF funds since May 2010.
It stands to get almost €90 billion euros more by the end of 2014.
But the rescue comes at a heavy price.
Austerity measures taken in exchange for aid have plunged the country into economic depression. Unemployment hit a record 26% in September, the highest in the euro zone. –  Reuters