Greek banks have been asked to provide details of their planned participation in a government debt swap program by Sept. 9, financial daily Imerisia reports Tuesday.
The Greek daily added that the government expects to complete the overall exchange by mid-October.
Specifically, the newspaper says that within the next three weeks, Greece’s lenders must inform the government of the amount of bonds they hold that are eligible for the program, and which of several swap options they will select.
The request was detailed in a letter sent by Greece’s debt management agency, which is leading talks on the debt exchange, that was sent to the banks Monday.
In July, European Union leaders agreed to a new EUR109 billion assistance 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.
The plan offers four options for private lenders to swap some EUR135 billion in Greek government bonds maturing between now and 2020 into new 15- and 30-year debt. According to analyst estimates, Greek banks hold about EUR25 billion worth of Greek government bonds that mature by 2020.
Depending on the level of private sector participation, Greek officials say they may extend the program to include debt maturing as late as 2024. Officials say that so far, creditors representing only about 50% of the bonds maturing in the next nine years have declared their participation.
According to the article, Greek banks are hoping to include any write-offs from the debt exchange in their second quarter 2011 results. Those are due to be announced next week just ahead of an Aug. 31 deadline for listed companies to report their second quarter earnings.
However, the article says that Greece’s capital markets regulator may push back that deadline for the banks, so as to allow final details of the swap deal to be worked out first.
Athens, August 23, 2011 (Dow Jones)