Greece Extends Bond Buyback Deadline

Submitted by: Colin Lokey
       Here's what I said previously about the 'success' of the Greek debt buyback:
"...despite attempts to spin the situation, Greece's ridiculous debt buyback (wherein eurozone taxpayers via EFSF bonds paid for Athens to repurchase PSI bonds from hedge funds and Greek banks) was a disappointment. Despite a generous offer in terms of price from Athens, the program fell short of expectations: as of Saturday, only 26 billion euros of the targeted 30 billion had been tendered. Now, Greece will need to coerce domestic banks into pledging more of their bonds by the December 13 deadline."
Sure enough, Athens has extended the deadline in an attempt to squeeze an extra 4 billion euros or so from its domestic banking sector which, readers are reminded, really has no choice in the matter because to jeopardize the buyback is to jeopardize their own recapitalization funds (which come out of the next tranche of international aid). Note the characterization of the buyback as a "liquidity opportunity" -- classic.

Press Release For Immediate Release
10 December 2012

Athens, Greece. The Hellenic Republic (the “Republic”) announced today that it has decided to extend the period for submission of additional participation instructions in respect of all securities eligible to participate in the Republic’s invitation (the “Designated Securities”) announced on 3 December 2012 (the “Invitation”) to offer to exchange Designated Securities for six-month notes to be issued by the European Financial Stability Facility (the “EFSF” and the “EFSF Notes”) until 12:00 p.m. (London time) on Tuesday, 11 December 2012 (which will become the “Expiration Deadline” for the purposes of the Invitation). The extension will allow holders of Designated Securities who have not yet offered them for exchange pursuant to the Invitation to participate in the Invitation. However, holders of Designated Securities that submitted participation instructions prior to the initial expiration deadline (being 5.00 p.m. (London time) on Friday, 7 December 2012) will not have the right to revoke or modify such participation instructions.

The Invitation is subject to certain conditions, including a financing condition and other customary conditions. Under the financing condition, the Republic will not accept offers of Designated Securities of any series for exchange or proceed with any part of the transaction contemplated in the Invitation unless it meets all of the conditions under a financing agreement with the EFSF for the Republic to be entitled to receive the EFSF Notes.

Stelios Papadopoulos, the head of the Public Debt Management Agency, stated “We have decided to extend the Invitation to offer Designated Securities for exchange to 11 December 2012. Holders that have not tendered so far can still take advantage of the liquidity opportunity offered by the Invitation. 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. Future measures may not involve an opportunity to exit investments in Designated Securities at the levels offered for this buy back.”


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