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NBG, Eurobank, Alpha Bank, Postbank involved in the buyback

07 December 2012 / 22:12:15  GRReporter
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The National Bank of Greece (NBG), Eurobank, Alpha Bank, Postbank (TT) and Attica Bank applied for participation in the buyback process of part of the debt that the Greek government has initiated. This became clear after the expiry of the deadline by which private investors had to apply for participation and submit a bid for the transaction.

The purpose of the government is to relieve the external debt by 20 billion euro by buying government bonds of a nominal value of 30 billion euro with a 10 billion euro loan from the European Financial Stability Facility (EFSF).

According to Mega TV, the hedge funds, which have applied for participation in the process, hold Greek government bonds with a nominal value of approximately 18 billion euro. Earlier in the day, sources from the financial system told Reuters that Greek banks were ready to participate completely in the debt buyback if necessary. The total nominal value of the public debt they hold is 17 billion euro.

At present, the process is being informally considered successful, but the Public Debt Management Agency and the Ministry of Finance refuse to comment on the involvement of investors. Financial analysts estimate that the buyback of part of the debt will be successful as it gives value for money to investors who bought the bonds in the secondary market at a price significantly lower than the nominal value.

The prospects for the development of the Greek debt are not rosy. The country remains in recession and the budget deficit is decreasing at a pace slower than the shrinkage of the economy. Meanwhile, international institutional lenders (mainly European countries) are not ready to accept a haircut of the debt held by the official sector. Possibly, a new debt restructuring might follow within a year or two, which would hit private investors again. This is a risk that foreign investors are not willing to take and so, they accept what the Greek government gives them.

On the other hand, Greek banks have no other choice. They should support the government in the debt restructuring and the bond buyback in order to obtain financing for their recapitalization. Although Finance Minister Yiannis Stournaras has made it clear from the outset that the involvement in the debt buyback is completely voluntary, he did not hesitate to point out that it was also a patriotic duty of the Greeks to make the process succeed.

 

Tags: EconomyMarketsBond buybackGreeceRestructuringForeign debt
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