STOCK MARKET WATCH -- Friday, 7 December 2012

[Demeter]

17. Terms of Greek Bond Buyback Top Expectations

http://www.nytimes.com/2012/12/04/business/global/greece-announces-terms-of-13-billion-bond-buyback-to-slash-debt.html?_r=0

In a bold bid to reduce its debt burden, Greece offered on Monday to spend as much as 10 billion euros to buy back 30 billion euros of its bonds from investors and banks. While the buyback had been expected, the prices offered by the government were above what the market had forecast, with a minimum price of 30 euro cents and a maximum of 40 cents, for a discount of 60 percent to 70 percent. Analysts said they expected that the average price would ultimately be 32 to 34 euro cents, a premium of about 4 cents above where the bonds traded at the end of last week.

Pierre Moscovici, the French finance minister, played down concerns that the Greek debt buyback might not go as planned.

“I have no particular anxiety about this,” Mr. Moscovici said Monday at the European Parliament ahead of the meeting in Brussels of euro zone finance ministers to discuss Greece. “It just has to be very quick.”

A successful buyback is critical for Greece. The International Monetary Fund has said that it will lend more money to Greece only if it is reasonably able to show that it is on target to achieve a ratio of debt to annual gross domestic product of less than 110 percent by 2022. Greece will have at its disposal 10 billion euros, or $13 billion, in borrowed money from Europe. Investors who agree to trade in their Greek bonds will receive six-month treasury bills issued by Europe’s rescue vehicle, the European Financial Stability Facility. The offer will close Friday. If successful, the exchange will retire about half of Greece’s 62 billion euros in debt owed to the private sector. The country still owes about 200 billion euros to European governments and the I.M.F. ...