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Greece asks creditors to sell their bonds back to the government

Athens will buy back its bonds, for between 30 and 40 per cent of their face value, in order to clear its debts.

Image: Natalia Dobryanskaya via Shutterstock

THE GREEK GOVERNMENT has issued an open invitation to its creditors to sell their bonds back to the government – but to accept losses of between 60 and 70 per cent on their investments.

The Greek finance ministry has told bondholders it is willing to buy back some of their debts, in a move that had been expected for some days.

The proposal is seen as a crucial part of the country’s plans at keeping its debts under control and at a sustainable level, as well as being a crucial step in securing the next round of much-needed bailout funds from the EU and IMF.

The offer applies to investors who hold long-term bonds maturing between 2023 and 2042, with investors participating in the proposal receiving between 30.2 and 40.2 per cent of their investments.

While this is a significant loss for many investors, the long-term nature of the debts mean many would have lent the money to Greece before the country’s economy took its dramatic downturn – so they may be willing to accept their losses, simply to be assured of any return at all.

If investors view the offer positively, and participation is significant, the move could mean Greece’s national debts could fall by tens of billions of euro. This Reuters interactive tool shows how much could be saved.

Early reaction to the news has been positive: Greek 10-year bonds trading on the second-hand markets have rallied, and interest rates this morning was 14.8 per cent – down from 16.4 per cent on Friday, and from around 38 per cent in early March.

The announcement comes as Eurozone finance ministers meet in Brussels to discuss the latest developments in the Greek economy, and discuss developments since last week’s agreement to release €43.7 billion in bailout loans.

Read: Taoiseach rejects Greek-style Anglo promissory deal

About the author:

Gavan Reilly

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