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Greece extends bond buyback deadline for a day

  • Associated Press
  • December 10, 2012 - 3:35 AM

ATHENS, Greece - In an attempt to generate stronger participation in its key government bond buyback program, Greece on Monday extended the deadline for banks, funds and investors who own its debt to declare whether they will sell their holdings back at a heavy discount on their nominal value.

The public debt management agency, PDMA, said bondholders now have until 1200 GMT (7 a.m. EST) on Tuesday to make up their minds.

The program aims to cut some (EURO)20 billion ($25.81 billion) from the crisis-hit country's debt load and ensure it continues to get its international bailout loans. The original deadline expired on Friday, with Greece's largest banks saying they would participate.

The government plans to spend about (EURO)10 billion in European funds on the buyback, offering between 30 and 40 percent of the bonds' face value. The bonds were trading at even lower prices than that on the secondary market, and Athens hopes investors will leap to the offer as many bought the bonds at less than half that price amid the political uncertainty that plagued Greece in the summer.

PDMA head Stelios Papadopoulos insisted Monday that bondholders are being offered a good deal, and said efforts will continue to get the country's bloated debt back to a manageable course.

"Investors should bear in mind that even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path," he said. "Future measures may not involve an opportunity to exit investments in (designated Greek bonds) at the levels offered for this buyback."

Greece's financial crisis started three years ago when it admitted its budget deficit would be more than three times bigger than forecast and soon. After it became impossible to raise money on the international bond markets, the country has depended on rescue loans from its European partners and the International Monetary Fund, adopting harsh austerity measures to secure the funds.

The spending cuts contributed to a recession that has wiped a fifth off the country's output since 2008, while unemployment is at 26 percent — the worst in decades.

Greece is hoping on Thursday to receive a (EURO)34 billion rescue loan installment, after a six-month delay caused by two national elections and long-dragging negotiations with the EU, IMF and European Central Bank over further demanded cutbacks. Although Athens has now adopted the spending, welfare and income cuts — coupled with new tax hikes — to get the money it still has to tie up the debt buyback over the next few days and table new tax laws on Tuesday.

Prime Minister Antonis Samaras was upbeat Sunday on the buyback.

"I am convinced that by Monday or Tuesday, one will be able to say with relative certainty that things have gone very well," he said.

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