Top bankers on Greek debt mission

Financial Times
July 5, 2011

At 8.30am on Wednesday , dozens of Europe’s top bankers were expected to traipse through the doors of 3 rue d’Antin in Paris’s Opéra district, headquarters of France’s biggest bank, BNP Paribas. Their mission? To agree a deal between the leading holders of Greek sovereign debt that will lead to their voluntary participation in rolling over bonds that are due to expire in the next three years.

On the face of it, signing up to a rollover would be madness. With the Greek sovereign struggling under the weight of its debt burden, its bonds are trading at yields of up to 27 per cent. Why sign up to new 30-year bonds with a coupon capped at 8 per cent?

But the European authorities, and the German government in particular, have made it clear that for any broader restructuring of Greek debt to work – and for the second tranche of €110bn of EU-IMF aid to proceed – there must be significant “private-sector participation” in overhauling the outstanding bonds.

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