Greek bond swap offer may go beyond 2020

AP News
Posted: Aug 10, 2011 8:17 AM
Greek bond swap offer may go beyond 2020

A Greek bond swap offer could be extended to cover bonds maturing after 2020 to reach a target participation amount of euro135 billion as part of an agreement granting the debt-ridden country a second bailout, the country's finance minister said Wednesday.

"This a very large-scale and innovative program _ it has never been implemented before," Evangelos Venizelos said on Real FM radio.

He said the "preparation period" would be completed by the end of September.

"Invitations must cover bonds worth euro150 billion which mature up to 2020 _ or a little later than 2020 ... Our aim is have 90 percent participation, or euro135 billion, and that is a giant change in Greece's debt profile which significantly eases the long term viability of the Greek national debt," Venizelos said.

Last month, European leaders agreed on a second bailout worth euro109 billion ($155 billion) for Greece, which was granted its first, euro110 billion package of bailout loans from the European Union and International Monetary Fund last year to save it from default.

The new agreement called for banks, pension funds and other private institutions that hold Greek debt to voluntarily swap their bonds for new ones with longer maturity periods, lower interest rates or slightly smaller face value.

"I am confident because all parties are determined to remain in this process and help," the minister said.

Banks are already factoring in lower returns on their holdings of Greek debt. Germany's Commerzbank AG wrote down its holdings of Greek debt to the tune of euro760 million ($1.1 billion) while releasing second quarter earnings earlier Wednesday.

Venizelos' comments came as his ministry released figures showing the country continued to struggle to meet revenue targets set out in its bailout agreement. State budget revenues showed a shortfall of euro87 million, with net revenues from the start of the year to July falling by 6.4 percent compared to the same seven months in 2010.

"The revenue shortfall can be mainly attributed to the larger than projected recession _ during the period when the Budget was being prepared _ in the last quarter of 2010," the ministry said. It also noted lower receipts from road tax, changes in the tax law affecting income tax revenue and an increase in tax refunds as a backlog from previous years was cleared.