Greece to buy back bonds to ease debt load

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.

By The Newsroom

Published 12th Dec 2012, 20:31 BST

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.