Crisis: Greece completes buyback, looks to next loan tranche

12 December, 09:56

(ANSAmed) - ATHENS, DECEMBER 12 - Greece completed its bond buyback program on Tuesday, accepting tenders for 31.8 billion euros' worth of government paper and clearing the way for the disbursement of the country's next, long-awaited bailout tranche. The extended deadline for bondholders to take part expired at 2 p.m. Greek time, by when the target had been met, largely due to an added contribution from local banks. However, several unresolved issues remain as daily Kathimerini reports.

Greece is borrowing 10 billion euros to execute the buyback, with the aim of reducing its public debt by 21.1 billion euros.

The average offer to buy back the bonds 33.8% of the principal amount, which means that Greece needs to spend 11.2 billion euros in total. It is not clear where the extra 1.2 billion euros will come from. Greece's lenders had estimated that the country's debt would be reduced by 11% but in fact the difference will be less than 10%, so eurozone finance ministers discussed during a teleconference on Tuesday night how to reduce it from 126.6% of GDP to 124%, which the International Monetary Fund had set as a benchmark in order to continue participating in the Greek program. The issue will be discussed further at Thursday's Eurogroup meeting in Bruxelles. There was no official statement as Athens is expected to make an official announcement about the scheme on Wednesday morning, but a European official told Bloomberg that eurozone finance ministers concluded there were no insurmountable obstacles to the next loan installment, which is worth 34.4 billion euros.(ANSAmed).

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