The 
Greek Finance Minister said on Friday that a European initiative allowing the Greek government to buy back outstanding debt is being discussed, according to Dow Jones Newswires.
Giorgos Papakonstantinou stated that there were no official talks, as the buy back scheme was just “an idea on the table”.
Since late last year, European governments have been discussing plans to extend the European Financial Stability Facility, to lend money to euro-zone countries in need of cheap loans.
Under this new scenario, the AAA rated EFSF, would borrow from the international markets and lend money to junk-rated Greece at a rate significantly below what Greece would pay on the markets, claims the news agency.
Greece would be able to buy back an estimated EUR50 billion to EUR60 billion in Greek government bonds thought to be held by the European Central Bank, which bought the debt on the secondary market as part of a program to support the Greek bond market, says Dow Jones.
According to an alternative scenario, Greece would issue the debt directly, but backed with a guarantee from the EFSF. Either way Athens would pay only about 70% of the face value of the bonds, effectively retiring its debt at a 30% discount.
Papaconstantinou said at the sidelines of World Economic Forum that Greece plans to re-enter the bond markets later this year, after being frozen out for much of 2010 because of prohibitively high borrowing costs.
See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!
