Brussels, le 11/12/2012 (Agence Europe) - Greece will be able to reduce its debt by some €21 billion with the income received from its debt buy-back programme. Extending the deadline for the buy-back launched on 3 December seems to have paid off because Reuters says private investors have offered to contribute €31.8 bn-worth of bonds. Now that the buy-back has been successful, eurozone finance minister meetings by video on Tuesday evening should be able to decide then and there to order the disbursement of the next instalment of aid for Greece ahead of the Eurogroup meeting of 13 December in Brussels, suggests a European source. On Tuesday, the Commission refused to confirm this, sticking to a timeline in which disbursement of the next batch of aid will take place on Thursday.
The debt buy-back ended on Friday with €26.5 billion offered by private investors for 33.4% of their face value. Athens then extended the deadline on Monday morning in a bid to achieve its target of €30 billion of the €62 billion of Greek bonds still in private hands. Last spring, a “voluntary” writedown of bonds owned by private investors removed €107 billion from the debt in one fell swoop.
At 1.00pm on Tuesday, when the buy-back ended, foreign funds had been able to sell some €17 billion in Greek bonds and Greek banks reportedly agreed to hand over their entire portfolios, worth a total of some €15 billion. A successful buy-back was a condition for continuing financial aid from the troika as set out in an agreement between Greece and its lenders on 27 November (see EUROPE 10739) in order to get the country's debt back on a sustainable track, aiming at reducing it to 124% of GDP in 2020. Reuters says the debt buy-back might cut the debt to 126.6% in 2020.
While awaiting the payment of the next batches of aid (on hold since June) and to cover debt deadlines in December, Greece raised just over €4 billion in short-term bonds on Tuesday morning. The Greek debt management agency, PDMA, itself raised €2.763 billion in addition at a rate of 3.99% for a month slightly up on a similar emission on 13 November. In addition, there is €1.625 billion in six-month bonds at a yield of 4.38%, lower than a similar emission on 6 December 2012.
World Bank will not be lending money to Greece. The World Bank attempted on Tuesday to ease troubled waters by stating that the aid it will be giving Greece is solely technical and not financial. World Bank President Jim Yong Kim said that Athens did not meet the criteria for a World Bank loan. Last month, Greece announced that Greece had asked for World Bank experts to help it get its economy rolling again. (EL/transl.fl)