February 19, 2012
Greece has finally set a date for a €200bn (£166bn) debt swap for private bondholders, which is part of a second €130bn bailout for the country that is being presented for approval by eurozone finance ministers on Monday. Greece's cabinet approved another set of austerity measures on Saturday, paving the way for the rescue package.
The swap involves private bondholders exchanging €200bn of Greek sovereign debt for a mixture of new bonds of a lower value and cash. The long-awaited debt restructuring will happen between 8 and 11 March, not long before Athens has to pay back a €14.5bn bond maturing on 20 March. The deal hammered out with private creditors will offer them new 30-year bonds with a coupon, or interest rate, of around 3.75%, which would rise if Greece achieved stronger-than-expected economic growth.
The European bailout fund, the European Financial Stability Facility (EFSF), is expected to make €30bn available as a cash sweetener for bondholders, which would translate into 10-15% of their holdings. Without that cash banks and hedge funds would probably walk away, as they will be made to suffer losses, or a "haircut" of up to 70% on their bond holdings. The size of the sweetener and the final interest rate are expected to be set by eurozone officials before the finance ministers' meeting on Monday.
More
No comments:
Post a Comment