Published December 07, 2012
ATHENS – Greece says it is sticking to plans to close its offer to buy back its own bonds from investors on Friday in a deal that should meet a debt writedown target set by its international lenders.
The government said it would shield the country's banks from any lawsuits over losses booked if they take part in the buyback.
The buyback, part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece's euro zone and International Monetary Fund lenders last month, is central to efforts to bring its debt to manageable levels.
Athens has no plans to extend the deadline for bids beyond Friday, finance ministry officials said, dismissing a Greek newspaper report suggesting the government could extend the deadline to early next week.
"The process will close today and there is no need for an extension," a senior finance ministry official said. A second official confirmed the 12.00 p.m. EST deadline.
Athens aims to spend 10 billion euros of borrowed money to buy back bonds far below their nominal value. It made the offer on Monday on more attractive terms than expected for investors, boosting expectations that enough bondholders will take part to cut national debt by the targeted 20 billion euros.
Greek banks, which hold an estimated 17 billion euros of bonds out of the 63 billion eligible for the buyback, will hold board meetings on Friday to decide whether they will join in.
Finance Minister Yannis Stournaras, who has told banks it was their "patriotic duty" to ensure the scheme is a success, told local radio Athens would include a provision that protects bank boards from lawsuits from shareholders in case of losses.
"There will be the same provision that was included in the PSI (earlier debt restructuring)," he told Real news radio, referring to the March debt swap where Athens passed a law shielding bank boards from investor lawsuits.
Greek banks - already battered by the country's debt crisis - have been hit further by fears that they would be forced to book losses from the buyback.
But they are expected to participate because they depend on the bulk of the more than 30 billion euros in bailout funds Athens stands to receive once the buyback is completed.
The price range set for the buyback by Athens varied from a minimum of 30.2 to 38.1 percent and a maximum of 32.2 to 40.1 percent of the principal amount, depending on the bond maturities of the 20 series of outstanding bonds.
Prime Minister Antonis Samaras has already said Greek pension funds holding more than 8 billion euros of the bonds would not take part, increasing the pressure on the remaining domestic bondholders to do so.
($1 = 0.7700 euros)
(Additional reporting by George Georgiopoulos, editing by Deepa Babington/Ruth Pitchford)