Private Participation In the New Greek Program Still A Puzzle
European Union officials estimate the participation of private investors in the second bailout package to Greece at €30 billion for the period 2012-2015. The package is expected to reach a total amount of €110 billion. Under the initial planning, the remaining €80 billion are expected through privatizations (€50b) and bilateral lending from EU countries and the IMF (€30b).
The privatization program remains the big question, while the voluntary participation of private investors in the rollover of Greek bonds is also doubtful. The bonds maturing in 2012-2015 reach €88.3 billion, of which €30b mature in 2012.
Thus, one in three investors should agree to receive their capital later (maybe 10 years). Of course, they would continue to receive interest but in a any case a slight haircut would occur, while they should find a way to replace the liquidity ensured if the bonds matured normally.
The negotiations are feverish, as bankers should reach to an agreement by Thursday, when the European Union Summit is scheduled. If this solution is adopted, it would involve also the participation of Greek bondholders, including domestic banks and insurance funds. It is estimated that Greek investors hold almost €80b of Greek bonds, of which €20-25b mature in 2015. So, there should be a lengthening of €7-8b Greek bonds. Finance ministry officials had contacts with Greek bankers, and appear confident that if the consultations reach to an agreement and the Eurozone adopts this solution, the there would be no problem regarding the participation of Greek private investors.
The question however remains whether the country would return to the markets in 2013, because the borrowing needs are high in the period 2016-2019.
(capital.gr)
