Greece announced at noon on Wednesday that it had received offers amounting to 31.9 billion euros for its bond buyback program, which was slightly more than the initial target but also means Athens will have to borrow more than originally planned to execute the scheme.
The Public Debt Management Agency (PDMA) said that Greece would have to spend 11.29 billion euros to complete the buyback, with the weighted average price of the tenders coming in at 33.8 percent of the nominal value.
This means that Greece will have to borrow 1.29 billion euros more from the European Financial Stability Facility (EFSF) than had been estimated.
“The Republic hereby announces that it has advised its official sector creditors that, subject to the satisfaction of the financing conditions described below (including an increase of 1.29 billion euros in the aggregate principal amount of EFSF notes to be made available to the Republic, if approved by the EFSF)… it intends to accept all designated securities of each series validly offered for exchange,” said the PDMA in a statement.
According to data published by the PDMA, Greece accepted to buy 31.86 billion euros, or 51.9 percent, of the total of 61.44 billion euros of government bonds that were held by the private sector.
Kathimerini understands that the buyback will reduce Greece’s debt by 21.1 billion euros.
Greece’s lenders had estimated that the country’s debt would be reduced by 11 percent 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 percent of GDP to 124 percent, 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 Brussels, where Eurozone finance ministers are expected to approve the disbursal of Greece’s long-awaited loan tranche, worth 34.4 billion euros.
Speaking before the PDMA’s statement, IMF managing director Christine Lagarde appeared satisfied by the outcome of the buyback.
“I will reserve my comment to the European partners and to other members of the Troika but for the moment I can only welcome the results that have been produced by the debt buyback,” Lagarde said on a trip to Colombia.