Bloomberg reports that the debt relief proposals for Greece to be presented at a December 5 meeting of euro-area finance ministers, will largely consist of swaps of €33 billion of the the current EFSF holdings of Greek banks, due between 2034 and 2046, with the fixed-rate notes will expiring in 2047.
That will protect Greece’s banks from future interest rate risks, but it may come at a cost for its four systemically important lenders, which could be left with securities that are more difficult to trade. The technical aspects of the operation are still being hashed out.
Bloomberg quotes ‘three people with knowledge of the matter .who asked not to be named because they weren’t authorised to speak publicly about the matter’.
The swap is part of a package of debt-relief proposals for Greece according to the people,
Swap Costs
Euro-area finance ministers asked the crisis fund last May to propose measures to improve Greece’s ability to carry its debt load without adding to the burden on European taxpayers (this does not include taxpayers in Greece). The measures include smoothing out the repayment profile on bailout loans that went to rescue the banks and reducing interest rate risk on the money that went on loan repayments. So, they are looking at all Greek-related EFSF assets, as well as those of the fund that later replaced it, the European Stability Mechanism.
according to Bloomberg, National Bank of Greece denied that the plan in its current form would mean losses for banks, and two other Greek lenders, Eurobank Ergasias SA and Alpha Bank AE, declined to comment on the negotiations or the potential costs of the proposed restructuring. A central bank representative also declined to comment.
