European Banks Near 70% Greek Rollover Deal

Bloomberg
June 27, 2011

Greek creditors may be headed toward a rollover agreement involving 70 percent of their bonds to prevent a default and meet politicians’ calls that they contribute to Greece’s second rescue in as many years.

Under the French proposal, half the Greek debt held by banks and insurers maturing in the next three years would be swapped for new 30-year Greek bonds. The redemptions from another 20 percent would be used to buy 30-year, AAA-rated, zero-coupon bonds to be held as collateral, two people familiar with the plan said.

“We’ve been working on this” and hope other countries will join the proposal, French President Nicolas Sarkozy said today at a press conference in Paris. Germany’s biggest banks and insurers are weighing the French proposal, a person familiar with the matter said today.

German and French lenders are the biggest European holders of Greek debt and their participation in the plan is key to the European Union goal of getting banks to roll over at least 30 billion euros ($43 billion) of bonds. The debt swap is part of a broader aid package EU leaders have pledged to pass next month to prevent the euro-region’s first default a year after the 110 billion-euro Greek bailout that failed to stop the debt crisis.

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