Greece's Bond Swap Deal To Await EFSF Approvals
By Alkman Granitsas
Of DOW JONES NEWSWIRES
ATHENS (Dow Jones)--A proposed bond exchange program between Greece and its private sector creditors is expected to take place sometime in October, but must first await approval by national parliaments granting new powers to Europe's temporary bailout fund.
The bond exchange, which aims to cut Greece's debt burden and lengthen the maturity profile of the country's public sector debt, is being backed by the newly-empowered European Financial Stability Facility, or EFSF.
National legislatures in the 17 countries that now use the euro are in the process of drafting legislation to implement the changes to the EFSF. But so far none have ratified the changes and apparent delays in the process have unsettled European financial markets in recent weeks.
"The bond swap deal will go live after the enhanced EFSF has been voted on by parliaments," a Greek government official said. "After that approval, and to the extent that anyone can predict these things nowadays, we expect the live offer will come some time in October."
In July, European Union leaders agreed to a new EUR109 billion aid program for Greece to cover its financing needs for the next several years. Central to the Greek plan is a distressed-debt exchange whereby the country's private-sector creditors agree to accept new bonds worth less than their original holdings.