Greek Finance Minister hopes to have completed all procedures for the new debt rescue deal, including a bond swap with private creditors, by early October.
Euro zone leaders agreed at an emergency summit last month to give the debt-choked country a second bailout to avoid bankruptcy. Banks have pledged to shoulder part of the burden through bond swaps, but much of the details still need to be agreed.
“This is a colossal enterprise, which is absolutely unique — look at how many actors must cooperate, countries, organisations, banks, rating agencies,” Finance Minister Evangelos Venizelos told a parliamentary committee.
“We estimate that all this will be completed by early October,” he added, without providing any more details.
Greek officials had previously said they planned to start a bond swap in August and complete it swiftly. They have not said when they will formally ask for the new, 109-billion euro bailout agreed by euro zone leaders.
Greek banks, who are the biggest private holders of the country’s debt and are bracing for losses in the bond swap, expect the exchange to be completed by September.]
IMF European Department Director Antonio Borges called on Wednesday for an “early conclusion” of talks between Greece and private creditors on a bond swap, saying this was needed to provide cash flow relief for the country.
“To ensure the success of the authorities’ programme amidst what remains a fragile situation, it is important that these discussions are brought to an early conclusion, and that creditors take timely decisions about their participation in the debt exchange operation,” Borges said in a statement.
“With the expeditious implementation of the improved financial terms of the official sector support and the successful involvement of the private sector, Greece can realise the cash flow relief that is a necessary step towards a sustainable debt and debt service profile over the medium term.”
The rush to complete the voluntary swap of privately held Greek bonds comes as rating agencies cast Greece deep into junk territory and after initial market optimism over the EU deal quickly soured.
Bank lobby IIF, which is helping coordinate talks on the bond exchange which started in Athens this week, has estimated that about 90 per cent of all private holders of Greek debt maturing by 2020 will take part in the scheme.
Greece’s private sector creditors have agreed to take a 21 per cent loss on their bond holdings as part of a 37 billion euro contribution to Greece’s rescue plan.
All Greek lenders will take part in the exchange, Venizelos said, with the possible exception of two state lenders, ATEbank and Hellenic Postbank because of complications due to rules over their status.
Venizelos also said Greece should be able to return to bond markets in 2014, a view shared by senior IIF official Charles Dallara.
The minister said Greece was still in “tough negotiations” with Finland, which is particularly insistent on detailed assurances from Athens over the guarantees it must put up for the EU loans it will get under the rescue plan.
“This issue has acquired a symbolic value in Finland,” he added.
Source : Reuters
