ECB accepts Greek bonds as collateral again

(FRANKFURT) - The European Central Bank said Thursday it will again accept Greek bonds as collateral for bank loans, after temporarily suspending their eligibility at the end of last month.

The ECB said in a statement that its policy-setting governing council "has decided that debt instruments issued or fully guaranteed by the Hellenic Republic will be again accepted as collateral in eurosystem credit operations."

On February 28, the ECB announced that it was temporarily suspending the eligibility of such bonds for use as collateral for central bank loans following the announcement by rating agency Standard & Poor's that Greece was in "selective default".

But the ECB had now decided to revoke the suspension, it said.

In a 237-billion-euro ($313-billion) Greek bailout deal, the eurozone has agreed to provide Greece with up to 130 billion euros in new financing while private investors are supposed to write off 107 billion euros' worth of Greek debt via a bond swap as part of a deal that expires on Thursday.

At the time of downgrading Greece, S&P said that if the exchange is consummated, "we will likely consider the selective default to be cured and raise the sovereign credit rating on Greece to the 'CCC' category, reflecting our forward-looking assessment of Greece's creditworthiness."