Guest post by Sober Look.
Greek government debt yields hit another post-restructuring low (14.9%), as the government offered a better than expected price for the bonds. These bonds are now quite popular in the European markets – it’s not every day that one gets a buyback from a sovereign. The minimum price offered in the buyback program is 30 cents on the euro (on the longest maturity, most discounted bonds).
This steep discount is necessary in order reduce the amount of debt outstanding. It looks as though the bonds will trade in the 32-34 range. Greece expects to spend about €10bn of borrowed money in order to reduce the outstanding debt level by roughly €20bn (30bn of face costing 10bn).
NYTimes: – 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.