Greece to launch public offer for debt writedown

Feb 24, 2012, 10:48 GMT

Athens - Greece is expected later Friday to announce a bond swap by which it will seek to exchange 107 billion euros (142 billion dollars) of debt held by banks and private creditors for paper valued at a lesser amount.

An announcement is expected to be made following a cabinet meeting later on Friday. Although it would mean debt holders could ultimately receive only about half of what they are owed, they are likely to accept the deal, as the alternative is a complete default.

The writedown for debt held by banks, pension funds and other private holders of Greek government bonds was already agreed to by eurozone finance ministers this week as they considered a new 130-billion-euro bailout. It was approved by Greece's parliament on Thursday.

Under the deal, private bondholders will exchange their devalued Greek government bonds for new ones with a value 53.5 per cent lower than the original. They would also have lower interest rates and longer maturities.

Several Greek newspapers quoted Finance Ministry officials as saying that Greece is hoping that voluntary participation in the bond swap will reach or exceed 85 per cent of creditors.