Brussels, 12/12/2012 (Agence Europe) - The Greek debt buyback that ended at midday on Tuesday 11 December has won the praise of everyone in the eurozone at a meeting on Tuesday evening to discuss the successful buyback, a precondition for disbursement of aid from the troika (the European Commission, the European Central Bank and the IMF).
Greek debt management agency PDMA said on Wednesday 12 December that the country had been offered no less than €31.9 billion-worth of bonds by private lenders agreeing to a huge write-down on the face value of their bonds, but slightly less of a write-down than expected.
The PDMA said that the price paid on average for the buyback was 33.8% of the face value. Greece had been planning to use the €10 billion lent to it by the European Stability Mechanism for this, but given the demand, the PDMA said it would need extra funding to the tune of €1.29 billion.
The idea of the buyback was to reduce the Greek debt by €20 billion, 11% of GDP, in order to achieve a debt/GDP ratio of 124% in 2020. Reuters says official sources say the buyback will only cut the ratio by 9.5%, leaving a gap of €450 million in terms of the objective set by Eurogroup. Reuters says the gap could be filled by buying back other bonds still held by private investors refusing to participate in the write-down in the spring when €107 billion was removed from the debt.
Despite the rumours about a gap, French finance minister Pierre Moscovici said on Wednesday that things were back on the planned track. IMF director general Christine Lagarde welcomed the success of the buyback. The Irish and Finnish finance ministers said upon arrival at the ECOFIN Council on Wednesday that there was a strong likelihood that the eurozone would reach agreement on disbursing the next batch of aid for Greece, which the country has been awaiting since the summer. Similar noises were made by the European Commission, which said on Wednesday that it expected the eurozone to stick to the initial timeline.
At the Eurogroup meeting on 13 December, ministers will examine the bank bailout needs of Cyprus and the study by PIMCO, but they are not expected to make any decisions about financial aid for Cyprus until January 2013. (EL/transl.fl)