Pimco rejects Greek debt buyback suggestion
As European policymakers wrestle with reducing Greece?s debts to keep the nation in the euro, investors are dismissing the suggestion of a bond buyback.
Seven months after pushing through the largest sovereign restructuring in history, euro-region leaders are searching for ways to help Greece meet its debt reduction targets amid a fifth year of recession and political resistance to austerity.
A buyback is one of the solutions being considered, European Central Executive Board member Joerg Asmussen said last month.
The plan is unlikely to work as it will probably require more money from Europe?s creditor nations and may not even succeed in lightening the load, said investors including Pacific Investment Management Co. Bondholders also would be reluctant to sell securities that are worth about a third of face value.
?While a debt buyback is a possibility, it is unlikely because it requires more cash from Germany to retire privately held debt,? said Myles Bradshaw, executive vice president and money manager at Pimco in London.
?It would be difficult to do a buyback without driving up prices sharply and hence reducing the debt relief provided to Greece.?
[Bloomberg]
