Greece launches public offer for bond swap

Feb 24, 2012, 12:32 GMT

Athens - Greece on Friday launched a formal bond-swap offer for banks and private investors aimed at driving down the country's debt burden by 107 billion euros (142 billion dollars).

The writedown of debt held by banks, pension funds and other private holders of around 200 billion euros in government bonds was agreed as part of another international bailout for the debt-stricken country.

Earlier this week, eurozone finance ministers approved a further bailout worth 130 billion euros, 30 billion of which is to be paid to private bondholders as part of the bond swap deal.

Creditors have been called on to accept a 53.5 per cent loss on the face value of the government bonds they hold in return for new bonds with longer maturities of up to 30 years.

Interest rates on these bonds would be lowered to an annual 2 per cent by 2015, 3 per cent in 2021 and 4.3 per cent thereafter.

The success of the deal depends on a high level of participation.

'A titanic effort has been made... to ensure financial support for the country,' Prime Minister Lucas Papademos said.

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

Athens hopes to complete the debt restructuring process by March 12.