Green light to a debt rollover

French banks will­ing to help avert a Greek de­fault, rein­vest­ing bonds held in new se­cu­ri­ties over 30 years

Kathimerini English - - Business -

French Pres­i­dent Ni­co­las Sarkozy said yes­ter­day that some of the coun­try’s banks, in­clud­ing BNP Paribas, are will­ing to partly rollover ma­tur­ing Greek gov­ern­ment bonds in a bid to avoid a de­fault by the coun­try.

Un­der the pro­posal dis­cussed in re­cent days be­tween the French Bank­ing Fed­er­a­tion and the French Trea­sury, bond­hold­ers would rein­vest about 70 per­cent of Greek sov­er­eign debt ma­tur­ing from mid-2011 to mid-2014, said one of the peo­ple di­rectly in­volved with the talks, Bloomberg re­ported yes­ter­day.

French banks are among the big­gest hold­ers of Greek sov­er­eign debt – some 15 bil­lion eu­ros.

Sarkozy said the plan be­ing worked out be­tween French Trea­sury of­fi­cials and bankers would in­volve rein­vest­ing debt held by French banks in new se­cu­ri­ties over 30 years.

He urged oth­ers to fol­low the ex­am­ple of the French plan, which was pre­sented yes­ter­day at an in­ter­na­tional meet­ing in Rome where banks and fi­nan­cial in­sti­tu­tions dis­cussed what the pri­vate sec­tor can do to save Greece from de­fault.

A re­port in Le Fi­garo news­pa­per says that the banks are ready to rein­vest, or rollover, up to 70 per­cent of the Greek sov­er­eign debt they hold. Asked whether the re­port was cor­rect, Sarkozy said “yes.” “It’s a sys­tem that other coun­tries could find use­ful,” he said of the plan.

“The idea is that we won’t let Greece fall, we will de­fend the euro; it’s in the in­ter­est of us all,” he told a news con­fer­ence.

Fifty per­cent of the re­demp­tions would go into 30-year Greek se­cu­ri­ties, with the re- main­ing 20 per­cent in­vested in a fund made of “very high qual­ity” se­cu­ri­ties that would back the 30-year bonds, ac­cord­ing to a source. The pro­posal may be al­tered, he said.

Euro­pean gov­ern­ments are seek­ing to per­suade the re­gion’s banks to vol­un­tar­ily par­tic­i­pate in Greece’s sec­ond bailout to make the coun­try’s debt bur­den more sus­tain­able.

Euro­pean banks held about $52 bil­lion of Greek sov­er­eign debt at the end of last year, with French banks own­ing $15 bil­lion, the sec­ond-largest po­si­tion af­ter Ger­man banks, which owned $22 bil­lion.

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