Minister warns IMF may opt out

Finance Minister Yannis Stournaras has warned that if the ongoing bond buyback program fails, no one can predict what will happen at the December 13 Eurogroup meeting, when eurozone finance ministers are due to convene to assess the process that is meant to reduce the country’s debt. At the same time, international hedge funds are split as to how they will tackle the issue.

Speaking on Skai TV late on Tuesday night, Stournaras stressed the importance of the project, saying, “It must succeed.”

He added: “Who knows what will happen then after December 13, what measures will be taken afterward? The International Monetary Fund has committed itself to participating [in the bailout] provided that the buyback is successful. The truth is that I have no doubt about Europe, that it will do everything possible. But if the IMF stays out, that will generate centrifugal powers in certain eurozone member states.”

Stournaras is scheduled to meet again on Thursday with Greek bank representatives, ahead of Friday’s 7 p.m. deadline for offers.

All major banks have planned general meetings for tomorrow to decide what to do. Stournaras noted that Greek lenders have already made plans for bigger losses from the bonds than what the state’s proposal provides for.

Meanwhile hedge funds have three different strategies in their approach to the bond buyback proposal.

In a conference call conducted yesterday by investment bank Exotix it became clear that hedge funds were unable to agree on a common policy, as some are determined to participate in the buyback because they are set to reap significant gains from the state’s offer.

Other funds prefer to keep their Greek bonds in their portfolios as they believe that the buyback program will succeed and bond prices will rise.

Finally, there also are some funds that intend to participate in the program by offering only a part of the bonds they hold, and not all of them.

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