Greece offered €10 billion to buy back bonds issued earlier this year, as the bailed-out nation attempts to cut a debt load that may threaten future international aid.
The bid to ease Greece’s debt burden underscores a move away from austerity-first measures European leaders have embraced since the financial crisis began in 2009. German Chancellor Angela Merkel yesterday opened the possibility that Germany may ultimately accept a write-off of Greek debt, previously a taboo in the biggest contributor to euro bailouts.
The buyback is aimed at the €62 billion of new bonds issued when Greece restructured its privately-held debt in March. Greek banks hold about €15 billion of the bonds, while the country’s pension funds have €8 billion, according to a November 27 draft report by the troika. Hedge funds hold as much as €22 billion, Nomura analysts Dimitris Drakopoulos and Lefteris Farmakis estimated in a November 30 report.
Investors who join the buyback will receive payment in six- month bills from the European Financial Stability Facility, the Greek debt agency said. The Bank of Greece, the nation’s central bank, said today it expects the economy to return to growth in 2014, and warned that any delay in implementing economic reforms and budget measures could threaten that forecast.
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