After initially saying it had secured enough participation, Greece has extended the deadline for a buy back of its bonds in a bid to reduce its staggering debt to Dec. 11, in a last attempt to try to get more offers from bondholders, its debt agency (PDMA) said.
Only a few days earlier, on Dec. 7, the government said it believed enough investors had agreed to sell their holdings in Greek bonds back to the country at losses of 60 some percent. The face value of the bonds was about 30 billion euros ($38.73 billion) but Greece would have had to pay only about 10 billion euros ($12.91 billion.)
The effect would have been to reduce the debt, however, by 20 billion euros ($25.82 billion) in accordance with fiscal targets send by international lenders who are withholding a first series of $56.7 billion in rescue loans until then. A senior Greek banker who spoke on condition of anonymity told Reuters news agency that Athens aimed to get another 3-4 billion euros worth of bonds offered for exchange. “This will be easily covered by Greek banks, if foreign bondholders do not offer more,” the banker said.
Stelios Papodopoulos, the head of PDMA, said that, “Holders that have not tendered so far can still take advantage of the liquidity opportunity offered by the Invitation. Investors should bear in mind that even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path.” He added: “Future measures may not involve an opportunity to exit investments in designated securities at the levels offered for this buy back.”
The newspaper Ta Nea said Greece had received 26-27 billion euros in offers, below the target it needed to meet, as some investors were holding out and hedge funds are set to make a tidy profit off the scheme.
Greek banks and insurers had offered about 10 billion euros of bonds out of their total holdings of about 17 billion euros, the banker said. Shortly before the Dec. 7 first deadline, Greek banks got board approval to offer as much as 100 percent of their bondholdings to make the buyback work.