Brussels, 28/11/2012 (Agence Europe) - On Wednesday 27 November, the Greek Finance Minister Yannis Stournaras announced the launch at the beginning of next week of its programme to buy back part of its debt held by private investors, as decided at the most recent Eurogroup meeting where an agreement was reached on the viability of Greek debt (see EUROPE 10739).
Although Stournaras said that he is optimistic, Iannis Mastrokalos, the representative of the Public Debt Management Agency (PDMA) said that this buyback would be on a voluntary basis and was a complicated operation. According to the Greek press agency, the country intends to buy back bonds at a third of their nominal value. Bondholders will therefore have to accept losses on the assets they still hold.
An analysis by the Greek Eurobank has indicated that the operation is targeting around 50% of the €63.3 billion in sovereign debt still in the hands of private creditors. Eurobank also explained that by undertaking this operation Greece hoped to reduce its debt by around €17 billion. This operation will help meet the target set out by Eurogroup to bring its debt down to 124% of GDP by 2020. This buyback will receive financing of around €13 billion from additional loans from Greece's institutional lenders. This amount will not be included in the €34.4 billion to be paid after 13 December when the buyback is due to be finalised. If this operation proves unsuccessful, Stournaras provided assurances that there was a, “plan B”. (EL/trans/fl)