Greece extends debt buyback offer

Greece announced it had extended until Tuesday a debt buyback offer on which depend IMF-EU bailout funds to avert impending bankruptcy after having apparently fallen short of its target amount.

“We have decided to extend the invitation to offer designated securities for exchange to 11 December 2012,” the head of Greece’s PDMA debt management agency, Stelios Papadopoulos, said in a statement on Monday.

Private holders of Greek sovereign bonds originally had to submit by Friday their offers to participate in the buyback, which offered them 32.2 to 40.1 percent of the face value of the securities.

The PDMA statement said they now had until 1200 GMT on Tuesday to submit bids to participate in the buyback, which aims to cut Greece’s debt by about 20 billion euros ($26 billion) and is vital to qualify for more financial aid from the European Union and International Monetary Fund.

According to Greek media, the offer was extended as the target of 30 billion euros in bonds tendered had not been achieved.

Greek business daily Naftemboriki said the offers totalled about 27 billion euros. The financial website Capital.gr said the decision to extend the offer was made after consultations Sunday with eurozone officials.

“The operation is already a success,” but the state “is trying to fully reach its target, and maybe even surpass it,” said Costas Melas, an international finance professor at the University of Athens.

Manos Hadzidakis at the Beta financial house said the buyback had proceeded “very positively” so far, putting the participation of foreign investors at nearly 16 billion euros out of a total of 25 billion.

He said it would be the participation of Greek banks that would determine whether the target is reached.

The head of the PDMA warned investors that any future offers to buy back debt may not be as advantageous.

“Future measures may not involve an opportunity to exit investments (Greek sovereign bonds) at the levels offered for this buyback,” Papadopoulos said.

The IMF and the eurozone have agreed to release 43.7 billion euros in rescue loans in four instalments to enable Greece to avoid bankruptcy provided Athens carries out the bond buyback.

AFP