Greece hoping for bond swap agreement

Greek officials were hopeful yesterday banks would eventually participate in a bond swap deal as targeted, a key part of a bailout aimed at rescuing the euro zone member from bankruptcy.
By The Newsroom
Published 8th Sep 2011, 10:32 BST

A Greek newspaper reported the take-up was 75 per cent, well below a 90 per cent target just two days before a September 9 deadline for expressing interest expires. Greek officials would not confirm the figure, saying negotiations were ongoing.

“Negotiations are still taking place and may take a while longer but we are optimistic the target will be met,” said a source close to the talks. “Roadshows are now taking place in Asia and America.”

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Last month Greece turned the screws on investors, saying it may not go ahead with the debt swap if holders of less than 90 per cent of the bonds take part in the scheme, which foresees an average 21 per cent haircut on portfolios.

Struggling to meet the terms of its EU/IMF bailout, Greece is falling behind in reforms and privatisations, and is likely to miss its 2011 budget deficit target of 7.6 per cent by at least a percentage point amid an austerity-induced recession. Failure of the debt swap deal would threaten the entire second £95.7bn bailout to Greece, agreed in July on top of a 110 billion euro rescue in May 2010.

Under pressure from European taxpayers, euro zone governments insisted the private sector share the burden of averting Greece’s collapse before agreeing the new bailout. Athens wants about 135 billion euros of outstanding bonds maturing by the end 2020 to be rolled over. If banks don’t chip in, already reluctant governments may be asked to fill the gap.

Related topics:Greece