Greece banks aim for bond swap offer mid-August: Sources

Greece hopes talks with banks on a bond swap will progress fast enough to send a detailed offer spelling out its accounting impact in mid-August, with the aim of completing the exchange in September, Greek banking sources said on Tuesday.

The contribution by private sector bondholders to a rescue plan for the debt-choked country may total as much as 50 billion euros (USD 71.9 billion), on top of a new, 109 billion euros bailout agreed by euro zone leaders last month.
Complex talks are ongoing with banks on the details of the bond swap and its impact on the lenders' finances, with a target to reach a take-up rate of 90% for the scheme.
"Around mid-August we expect to receive from the government a memorandum of understanding which will set out the terms and the procedures on the basis of which the impact and losses to each bank will be accounted. It will also include a timetable," a senior Greek banker told Reuters.
Some creditors have debated the value of boycotting the exchange, particularly if heavily exposed lenders and insurers rush to endorse it in moves that might improve non-participating smaller bondholders' chances of being paid on time and in full.
Greek banks are the biggest private holders of the country's 300 billion euro-plus debt, with a combined government bonds portfolio of about 40 billion euros (USD 57 billion).
"We will have about 10 to 15 days to study it and return it signed with our response on whether we will participate, to what degree of our portfolio and under which of the four options," the banker said.
Authorities are under time pressure to complete the exchange as soon as possible, with rating agencies having cast Greece deep into junk territory and market sentiment rapidly souring towards sovereign debt in other parts of the euro zone periphery.
The agencies have said they would place a default or temporary default tag on the country's debt once the bond exchange is announced but will assign new ratings quickly once it is completed.
Bank lobby group IIF has said four options would be offered to creditors -- three bond exchanges and one offer of a rollover into debt with maturities of up to 30 years -- alongside a scheme to buy back Greek government bonds.
"As soon as we sign and respond, the government will have an overall picture of the participation," the senior Greek banker said. "Then, there will be a subscription period of about a week during which we will officially subscribe (to the plan)."
Several other senior Greek banking officials confirmed they were expecting to receive a memorandum of understanding around mid-August, with a deadline of two to three weeks to answer.
"The aim is to finish by end-August, meaning to have collected by then all the banks' responses and to have the final participation rate," one banking official told Reuters.
A third banker said: "The time banks will have to respond depends on how fast the whole procedure will be completed for the memorandum of understanding to be sent. All procedures and the bond exchange will have been completed by mid-September."
Greek Finance Minister Evangelos Venizelos has said Greece wants to complete the bond offer quickly to avoid lingering into default territory for long, without giving a specific target date.
The IFF, which is helping coordinate talks on the bond exchange which started in Athens this week, has estimated that about 90% of all private holders of Greek debt maturing by 2020 will take part in the scheme.
IIF managing director Charles Dallara told Greek newspaper Kathimerini this weekend that the swap would help Greece return to bond markets by early 2014, dismissing analysts' concerns that the latest bailout package offers only short term respite.