Banks offer Greece EUR 135bn rollover plan

(WASHINGTON) - Private banks have offered a plan to exchange and roll over Greek debt that will save the country 54 billion euros ($77.6 billion) over three years, the Institute of International Finance said Thursday.

The IIF, which has coordinated the banks' role in negotiations on a new Greek bailout package, said the plan was based on the "voluntary" participation of investors, and it aimed for 90 percent participation by private bondholders.

The offer was dependent on the European Union and the International Monetary Fund pulling together for their part in a new bailout of debt-laden Greece.

The banks also called on Greece to redouble its efforts in economic reform.

"As part of a comprehensive plan, including additional support by the IMF and the redoubling of adjustment efforts by Greece, we are prepared to participate in a voluntary program of debt exchange and a buyback plan developed by the Greek government," the IIF said.

"This will provide financing to Greece of 54 billion euros from mid-2011 to mid-2014 and a total of 135 billion euros from mid-2011 to end-2020," it said.

The proposed plan involves exchanging and rolling over current Greek bonds into 15- and 30-year instruments with interest rates equivalent to fixed coupons between 4.5 percent to 6.42 percent.

"The interest rates are structured to maximize the benefits to Greece in the early years of the program as Greece regains access to global capital markets," the IIF said.

"Our offer is conditioned on the comprehensive economic reform program of Greece, the strong support of the EU, which has just been reinforced, and additional support by the IMF."

Thirty banks, mainly from Europe, were listed in support of the offer.

"We expect support to build as the offer and the comprehensive program surrounding it is more widely disseminated."

The offer came at the end of a European summit in Brussels Thursday on Greece, which was on the edge of default on its 350 billion euro debt burden.

Josef Ackermann, IIF chairman, said the package would balance the interests of all parties to the Greek problem.

"Greece will benefit from the improved EU terms, the support of the IMF, and the substantial financing and debt reduction coming from the private sector," he said in a statement.

"The EU will benefit from the voluntary support by the private investor community and the very real prospect of drawing a line under this exceptional support for Greece. The private investor community will benefit from a more stable financial and economic environment."