ATHENS--Greece announced Monday a one-day extension in its plan
to buy back tens of billions of euros of debt--a move demanded by
the country's official creditors in exchange for fresh aid--after
intial offers last week fell short of target.
According to the country's debt management agency, the new
deadline for offers--which had been previously set for last Friday
afternoon--will now be extended until noon London time on
Tuesday.
"We have decided to extend the invitation to offer designated
securities for exchange to 11 December 2012," Stelios Papadopoulos,
the head of the Public Debt Management Agency, said in a statement.
"Holders that have not tendered so far can still take advantage of
the liquidity opportunity offered by the invitation."
As of Friday's deadline, Greece had attracted between 26 billion
euros and 28 billion euros ($33.6 billion and $36.2 billion) in
offers, according to people familiar with the deal--just short of
the roughly EUR30 billion the debt management agency had been
targeting.
Since its financial crisis began in 2009, Greece and its
official creditors from the euro zone and the International
Monetary Fund have been struggling to bring down the country's
crushing debt load. Earlier this year, Greece's private
creditors--including the banks--were asked to take a steep
write-down in the EUR200 billion of Greek debt they held. Despite
that write-down, the country's debt burden is still expected to top
180% of gross domestic product this year.
The buyback seeks to retire about half the EUR62 billion in debt
Athens owes private creditors. As part of the buyback plan, Greece
is to use as much as EUR10 billion to buy back its outstanding
bonds at around a third of their face value, thereby shaving off
EUR20 billion of that debt.
Greece's four largest banks in terms of market
capitalization--National Bank of Greece SA (ETE.AT), Eurobank
Ergasias SA (EUROB.AT), Alpha Bank AE (ALPHA.AT) and Piraeus Bank
SA (TPEIR.AT)--are all participating in the buyback, as is
state-controlled lender Hellenic Postbank.
By re-opening the offer, the government hopes that Greece's
banks will increase their pledges to ensure the program's success.
The four big commercial banks, which hold almost a quarter of the
nation's bonds in terms of value, still hold some EUR4 billion to
EUR5 billion of that debt on top of the EUR10 billion they have
already committed to sell--enough to cover the gap, the people
said.
None of the banks has officially disclosed how many of their
bonds they would sell back to the government. However, as of
Friday, according to senior Greek banking officials, the country's
four biggest banks had committed to sell just 67% of their total
portfolio, hoping to hold on to the balance.
The buyback, which must be completed by Wednesday, is a
precondition for unlocking the next tranche of aid for Greece from
the euro zone and the International Monetary Fund. Thursday,
euro-zone finance ministers are expected to give the green light to
that next tranche of aid.
Write to Alkman Granitsas at alkman.granitsas@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires