Greece has extended the deadline for the bond buyback program until Tuesday, December 11th at 12:00 GMT. Greece is supposed to receive the long awaited tranche of aid on December 13th, and a successful buyback program is a prerequisite for a receiving the money.
Reportedly, most private holders of Greek debt already submitted proposals, and Greece just allows more time for the others to submit theirs. However, 3 worrying details could show that Greece is under big pressure:
- Veiled threat: This is a quote from the Stelios Papodopoulos, head of Greece’s Public Debt Management Agency: “Future measures may not involve an opportunity to exit investments in designated securities at the levels offered for this buy back”. So, Greece hints that those not taking the opportunity now, could lose all their money later. Greece wants to pressure the holdouts, but who is really under pressure?
- No Exit: While Greece extends the deadline for those who want to submit offers, it does not allow for those who have already submitted their bonds for the program to withdraw.
- No details: Finance ministry sources said that the 30 billion euros worth of bonds offers was already achieved and that the extension allows for extended participation. However, in the announcement about the extension, no details have been given about the participation rate so far.
Does this look like the buyback program has succeeded?
In addition, the statement also included a hint about the need for euro-zone countries to accept losses on loans to Greece (or more politely: Official Sector Involvement):
…even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path…
Germany will eventually have to choose between an orderly haircut or a disorderly one, via a Grexit.
Further reading: Is the IMF Ready to Leave Troika and Greece?
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