Greece will buy back 31.9bn euro (£25.7bn) of its bonds from private investors at a third of their nominal price, in a move to lighten its crushing debt load and meet a key condition to receive vital rescue loans.
The Greek debt agency said it would pay banks, funds and other private bondholders roughly 33.8 per cent of the bonds’ face value. That is still a highly attractive option, as the bonds have been trading well below face value since a major debt writedown in March.
Investors brave enough to have bought Greek debt just a few months ago now stand to make 200 per cent gains.
The agreement will shave some 20bn euro (£16.1bn) off Greece’s 340bn euro (£273.9bn) debt, which is now mostly held by its bailout creditors – European partners and the International Monetary Fund.
The yield on Greek 10-year bonds dropped to about 12.6 per cent on Wednesday, its lowest since the March write-off and a sign of greater investor confidence in the country’s ability to manage its debt.