Europe’s rescue fund may provide 35 billion euros ($46 billion) to help Greece buy back bonds held by euro-area central banks as collateral, draft legislation published by the Greek government shows.

The European Financial Stability Facility would lend Greece that amount to buy back sovereign bonds held by central banks as collateral in refinancing operations, according to documents posted on the Hellenic parliament’s website. The European Central Bank would facilitate the purchases.

In July last year, then-ECB President Jean-Claude Trichet said that euro-area governments had agreed to guarantee as much as 35 billion euros of Greek debt for the purposes of ECB refinancing operations. That would be necessary if Greece is deemed to be in selective default after a bond swap with private-sector investors, because the ECB cannot accept bonds with a default rating.

The documents show the EFSF would also provide 30 billion euros “in order to permit Greece to finance, in part, the Voluntary Liability Management Transaction,” or private-sector bond swap. A further 5.7 billion euros would help cover interest payments on the bonds.

The EFSF could lend Greece an additional 23 billion euros “in order to finance the recapitalization of certain financial institutions,” according to one document.

[Bloomberg]