Global bondholders to decide on Greek swap offer Friday
By George Georgiopoulos
ATHENS (Reuters) - Investors in Greek government debt from around the world tell regulators on Friday whether and how they will participate in a bond swap aimed at giving Athens more time to emerge from a debt crisis, with officials expecting a take-up of about 70 percent.
Athens has given banks and insurers in 57 countries until September 9 to say whether they intend to take its debt exchange offer, a key part of a second 109 billion euro bailout package it clinched in a July 21 summit to avoid bankruptcy.
"September 9 is the cutoff date and it is very likely that we may have a bigger response rate as bond holders rush on the last day," a source close to the procedure said on condition of anonymity.
Greece had threatened to cancel the deal unless it got 90 percent participation, meaning 135 billion euros ($189 billion) of its outstanding bonds maturing by 2020 swapped or rolled over in a global transaction it wants to conclude next month.
Greek authorities have said they are pleased with the progress of the private-sector involvement (PSI) program without disclosing details on take-up rates, which bankers say are around 70 percent -- a level they say would still be considered successful.
"Even with a participation rate of 70 percent or better, which is my current view, the PSI will proceed," said an Athens-based banker close to the procedures.
Greece is not planning any announcement on Friday as bondholders' non-binding responses must be aggregated by their respective regulators which will then send data to Athens, a process that may take time, the debt agency chief has said.
A high participation rate would give Athens cash-flow relief and more time to get its fiscal house in order amid rising worries that its commitment and ability to implement economic reforms prescribed by its international lenders is wavering.
If it goes through, the deal may offer some short-term relief to riskier assets and may push Bunds lower, but the move is likely to be short-lived given that Greece is missing its fiscal targets and EU/IMF aid is at risk.
"In a way we are more concerned about Greece getting their money than about this debt swap. There is a risk that Greece will soon run out of money," one trader said.
"The Greek situation is not getting any better and the Italian situation is monitored very closely so I don't see why we shouldn't see any (Bund) buyers on any pullback," the trader said.
Pressured by their taxpayers, euro zone governments insisted that the private sector shares the burden of averting a financial collapse in Greece before agreeing to the new bailout.
A low participation rate in Greece's debt swap may mean reluctant euro zone partners will have to cough up more cash for the overall package to work.
But a take-up rate close to target will not require major plumbing to adjust the rescue package, bankers said, adding that the shortfall could be covered by reallocating funds.
A source close to the procedures said the feeler by Athens on bondholders' intentions on the swap would show strong take-up in Europe, where the majority of Greek debt was sold for years.
"There is more support in Europe, where they will likely go for the full amount," the source told Reuters.
On Wednesday, another source close to the PSI talks said roadshows were taking place in Asia and America and that it would take more time to conclude the deal.
Greek and European lenders such as National Bank of Greece <NBGr.AT>, France's BNP Paribas <BNPP.PA>, Belgian group Dexia <DEXI.BR> and Germany's Commerzbank <CBKG.DE> are among the biggest holders of Greek bonds.
Small Greek lender Proton Bank said late on Thursday it would not take part in the bond swap, without spelling out why. It owns 691 million euros of securities that would have been eligible for the scheme, it said in a statement.
The International Institute of Finance (IIF), a global banking group leading the swap talks, expressed confidence earlier in the week that the swap offer would get the necessary investor support.
The trade group said last month that participation was at 60-70 percent.
(Reporting by George Georgiopoulos; Additional reporting by Marius Zaharia and Ingrid Melander)