FINANCIAL NEWS
Thursday, 25 August 2011 - 12:33
PSI Terms Expected Soon
Greek banks expect soon, possibly today, the conditions to participate in a voluntary restructuring of Greek debt. The announcement of the terms of debt rollover by the Finance Ministry would be sent first to the Eurozone FinMins as an invitation for their banks to join the program. Then it would be forwarded to the supervisory authorities, which would notify the banks.
Sources note that the terms of the PSI would include minor technical amendments, compared with the initial plan announced on July 21. The private investors (banks, insurance companies) are called to choose between three types of bond swaps and one type of rollover.
The first option regards the exchange of old bonds with new ones of equal nominal value and 30-year maturity. The interest rate is equivalent to 4.5% in constant terms.
The second option regards the rollover of bonds at their maturity in new ones of equal, nominal value and 30-year maturity. Also, in this case, the interest rate would be equivalent to 4.5% in constant terms.
The third option is to exchange bonds with new ones at 80% of their nominal value with maturity of 30 years. The interest rate would be 6.42% in constant terms.
The last option is the swap of bonds at 80% of their nominal value with new bonds of 15-year maturity and interest rate at 5.9% in constant terms.
For the first three options, EFSF offers full collaterals, while the new bonds would have zero coupon and AAA credit rating. The fourth option offers partial collaterals through EFSF.
Until September 9, banks have to send to the Ministry of Finance details of their bond portfolio structure, and how they wish to participate in the program. According to FinMin E.Venizelos, the swap of bonds is expected to be completed in the first ten days of October.
As Capital.gr noted previously, Greek banks hold 65% of Greek debt, maturing in 1-10 years. According to the European Banking Authority, National Bank, Alpha, Eurobank and Piraeus Bank hold bonds of €27.5 billion, maturing by 2020.