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GREECE IS TO buy back €31.9 billion of its bonds from private investors at just over a third of their face value, the country’s debt agency has said, lightening its crushing debt load and meeting a key condition to receive vital rescue loans.
But the deal will cost slightly more than originally budgeted, and must be approved by bailout creditors who are lending Athens the necessary funds.
The agency said in a statement it will pay banks, funds and other private bondholders roughly 33.8 per cent of the bonds’ face value – a significant loss for some, but a highly attractive option for others who bought Greek debt at knock-down prices only a few months ago.
The process will shave some €20 billion off Greece’s €340 billion national debt, which is now mostly held by its bailout creditors — its European partners and the International Monetary Fund.
The yield on Greek 10-year bonds dropped to about 12.6 per cent this afternoon, its lowest since the March write-off and a sign of greater investor confidence in the country’s ability to manage its debt. The Athens stock index was up 0.5 per cent in afternoon trading.
The government had no immediate comment on the result of the deal, saying it would await a meeting of European finance ministers tomorrow, who must first sign off on the buyback going ahead.
Under the terms of the draft proposal, Greece would spend €11.3 billion of its bailout funds on the bonds — more than the €10 billion initially budgeted. The question remains whether bailout creditors will accept the extra outlay.
Jonathan Loynes, chief European economist at Capital Economics, said the required additional cost was unlikely to derail the deal. ”It would be extraordinary if the whole thing fell apart over an amount that small,” he said.
He said it was a relief that the deal had been successful because there was a danger that some investors might have held out for better terms.
“They’re over that hurdle and that’s all good news, but the major challenge is to try to achieve the lasting economic growth that really is going to be needed if the debt ratio is going to come down in the way it’s predicted,” he said.
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Correct me if I’m wrong, but weren’t certain people around here saying that we need to do what the EU tells us or we’ll end up like Greece?
Re the Dail bit – Sadly it brings to mind “turkeys voting for christmas”
Mean while little old Ireland pays out 100 cent for every Euro……
Now you see why Enda received european lapdog of the year?
Best description of our beloved leader
That or most pathetic coward award……either title will suffice. The only ‘leader’ that does’nt have to address or answer questions from the electorate while getting paid a small fortune. Carlsberg don’t do jobs………
The government needs to grow a pair of balls and stop kissing the arse of the French and Germans and get the debt spread out over 100 years
ENDA DOESNT GIVE A TOSS ABOUT IRELAND…TRAITOR..NICE FAT PERKS AND PENSION IN A NICE EU JOB WHEN HES FINISHED. HE WILL LIVE IN BRUSSELS MORE LIKE. and i was a supporter of him . shame on me…
I recall that we also lent money to Greece (€500 million-ish, where ever we found that!!). Is that pony banjaxed too?
Of the EUR500 million we lent them, we will be getting EUR166 million back.
The bonds involved here don’t include the loans from the Troika or the other EU countries – part of the conditions for this programme going ahead included the provision that the Troika lenders wouldn’t be burned.
As it happens, Budget 2013 predicts Ireland getting €6 million in interest from our loans to Greece. It was only €4 million last year.
I think it’s a case of whoever has the biggest balls wins. It seems so for Merkel anyhow. Kenny, I’m afraid you’re peewee isn’t big enough for her. Santa might bring you a strap on for Christmas though!
Where are the FG/Labour fanboys,would like to hear what the defenders of the faith have to say !!
Yes another example that Enda’s current strategy of bending over isn’t working as well as the Greek f-off method.
Greece can do this because it has already lost the confidence of all international financial, political and business organisations. So they have nothing to loose. There will be no foreign direct investment in Greece for decades. We on the other hand are still attracting foreign investment, international companies are still locating here and a large number of our tax payers are employed by them. If we loose our international reputation as a stable country even in the bad times, our employment levels will get substantially worse.
yes cause 1in 5 households in ireland have 2 persons out of work and growing fast………..we are an out of work nation , theres not much further to drop.
There is a lot further to drop. The other 4 out of 5 households that still have at least 1 person with a job.
Strangely though Iceland seems to dispel this myth. Bond holders are risk takers, they fully expect if things go wrong they lose out. Had the Government have let the private institution Anglo Irish fold then investors would not have blamed Ireland the nation, but no doubt they would have made sure the reckless Board members of Anglo would have seen the inside of a court.
Peter your right. I believe our government should have done the same as Iceland. But now the private debt has been converted into sovereign debt, we unfortunately are in a completely different situation.
So surely our government should be doing everything in their power to see if Europe forced us into nationalizing this debt! Enda seems not inclined though
Not true. The Greeks are working their way to a solution. Once the crisis is resolved they’ll be the darling of those foreign investors you love so much. They can do sums you see.
yes enda’s lethargy worries me too, if we keep gong the way we are we will have it all paid off and the country will be in tatters, germany will soon want a rate increase and 200,000 mortages here will go west. i worry for him because he seems ill advised. the country has to be got back to work its the only way the mortgage crisis can be averted. take the money we are paying the bondholders next year and stimulate the economy before its too late
Isn’t that exactly what was said about Iceland a few yrs ago and now the have Triple A rating on bonds market and can raise whatever they wish. So take ur lap dog attitude with u and let’s play hardball. This governent ain’t got balls for the job.
This is effectively a default from what is effectively a basket Cass economy. I do not believe Ireland is not best served by seeking to follow this route…
sorry for obvious mistakes in the above…..
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