China Interested In Taking Part In Greek Bond Buyback Plan
(Rewrites throughout with background, details)
By Stelios Bouras and Alkman Granitsas
Of DOW JONES NEWSWIRES
ATHENS (Dow Jones)--China has shown interest in taking part in a European Union-led bond buyback program aimed at easing Greece's debt burden, a finance ministry official said Friday, in a sign of Beijing's growing concern about financial stability in the euro zone.
"There is an interest from China," the Greek official said but gave no details. An official at the People's Bank of China declined to comment.
Last week European Union leaders decided on a second EUR109 billion aid package for Greece, which includes a EUR20 billion program to buy back and retire outstanding Greek debt. It would be the first euro-zone program of its kind and financed by the European Financial Stability Facility, a fund set up last year in response to Greece's plight.
Addressing a Greek parliamentary committee Thursday, Greek Finance Minister Evangelos Venizelos said non-European governments--such as China--could help finance the buyback program.
"A third country will be able to form a third pillar, and this third pillar can support the public debt buyback mechanism," Venizelos said. "This is of great importance for the prospects of this program."
China, the world's biggest creditor nation, has already pledged to buy billions of euros of European debt to help Greece and other troubled euro-zone countries find a way out of their crisis, which could severely compromise Beijing's economic interests. The European Union is China's biggest trade partner and China exports twice as much to the EU as it imports from the 27-nation bloc.
China is believed to have purchased large volumes of AAA-rated bonds issued by the EFSF as part of bailout packages for Ireland and Portugal. A country-by-country breakdown isn't available, but the EFSF has indicated major participation by Asian investors.
On Thursday, Greece held its first talks with private creditors on a proposed EUR135 billion bond swap program, also part of the new bailout. It involves the country's private lenders trading in their existing Greek securities for new 15- and 30-year debt.
That program, combined with the anticipated buyback plan, would potentially reduce Greece's overall EUR350 billion stock of public debt by EUR24.3 billion, according to an estimate by the Institute for International Finance, a trade body of the world's leading banks.
The Chinese government holds Greek government bonds as part of its overall portfolio of assets. Greek bonds now trade at between one-half and three-quarters of their face value after months of selling pressure by investors fearing a Greek government default.
At last week's European summit, the EFSF was given new powers that would allow it to buy back Greek government bonds on the secondary market, selectively lend to other eurozone states facing financing difficulties and fund government support schemes for commercial banks.
Buona giornata a tutti gli amici dei titoli della Patria dei greci.
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