Greece Meets Goal in Debt Buyback Sought to Unlock Aid

Greece Will Be Close to Target in Debt Buyback, Official Says
Greece is using a 10 billion-euro loan from Europe’s bailout fund to repurchase debt it issued earlier this year in the biggest sovereign restructuring in history. Photographer: Kostas Tsironis/Bloomberg

Greece drew enough bonds to its buyback of sovereign debt to meet a goal that’s crucial to unlocking aid from the International Monetary Fund and European Union, a government official said.

Investors tendered Greek bonds with a face value of more than 31 billion euros ($40.3 billion), the Finance Ministry official said yesterday, asking not to be identified because he isn’t authorized to speak publicly. He didn’t provide further details.

Greece was seeking to use a 10 billion-euro loan from Europe’s bailout fund to retire about 30 billion euros of debt issued earlier this year in the biggest sovereign restructuring in history. International bailout funds to Greece have been frozen since June after two elections and a deepening recession.

“It seems that the debt buyback was successfully completed,” said Commerzbank AG analyst Christoph Weil in a note yesterday. “This is the end of months of uncertainty about the payment of the next support tranche.”

Euro-area finance ministers discussed the transaction on a conference call yesterday, concluding that no insurmountable obstacles remain to the next disbursement of aid to Greece, a European official said. The ministers noted that while some minor issues remain, they should be resolved at a meeting in Brussels on Dec. 13, the official said on condition of anonymity.

Bondholders had until noon London time yesterday to tender their debt holdings after an original Dec. 7 deadline was extended.

Aid Decision

Greece’s 10-year bond gained for a fourth day with the yield falling 69 basis points to 13.11 percent, the lowest since the country restructured its debt in March.

The plan to repurchase debt was part of a package of measures approved by finance ministers on Nov. 27 to lower the nation’s debt to 124 percent of gross domestic product by 2020 from a projected 190 percent in 2014.

The buyback is focused on the 62 billion euros of bonds issued when Greece restructured its privately held debt in March. The prospects for a successful completion improved after the government increased the offer price above the closing level of Nov. 23, which finance ministers had said would be the maximum.

The finance ministers plan to make a formal decision on Greece’s 34.4 billion-euro aid payment on Dec. 13. A separate Finance Ministry official in Athens said yesterday he expected a decision on the release of the tranche then, following an assessment of the buyback.

Deutsche Bank AG and Morgan Stanley were appointed to manage the buyback, according to Greece’s debt agency.

Download: Humes Says Greek Debt Beats Anything Else


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