Bloomberg News

Greece Hires BNP Paribas, Deutsche Bank, HSBC for Exchange

July 27, 2011

(See {EXT4 <GO>} for more on the European debt crisis. Updates with aid details of EU aid in third paragraph.)

July 27 (Bloomberg) -- Greece hired three banks to oversee its voluntary bond exchange and debt buyback plan, part of the European Union’s plan to stem the sovereign debt crisis.

BNP Paribas SA, Deutsche Bank AG and HSBC Holdings Plc will be joint dealer-managers, responsible for private sector involvement in the aid package, the Athens-based Finance Ministry said in a statement today. The lenders will provide a committed financing facility to Greece, the ministry said.

Banks, insurers and other private investors pledged this month to participate in the plan as European Union leaders struggle to avert the euro area’s first default. The EU and the International Monetary Fund will provide 109 billion euros ($158 billion) between now and 2014, and private investors will contribute 54 billion euros by bond exchanges and buybacks.

The plan will lengthen the average maturity of privately held Greek debt to 11 years from six years. Investors that take part in the program would have to write down the value of their existing Greek bonds by about 21 percent, according to the Institute of International Finance, which has led talks between the EU and investors on the program.

The Greek government said it also retained Cleary Gottlieb Steen & Hamilton LLP as its international legal adviser and Lazard Ltd. as financial adviser, according to the statement.

Greek Holdings

BNP Paribas has about 5 billion euros of net exposure to Greek government bonds, while Deutsche Bank has 1.5 billion euros and HSBC $1.2 billion, according to data provided by the banks for the EU stress tests.

The timing of the bond program depends on the government, which is hiring a team to set up the specifics of the exchange, IIF Managing Director Charles Dallara has said. Greek Deputy Finance Minister Filippos Sachinidis told Mega TV in an interview this week the process will start in August.

Investors will have the option to exchange existing Greek debt into four instruments. Three will be fully collateralized by AAA-rated zero-coupon securities and have a 30-year maturity, and the fourth will be for 15 years and partially collateralized by funds held in an escrow account.

--With assistance from Marcus Bensasson in Athens and Howard Mustoe in London. Editors: Edward Evans, Steve Bailey.

To contact the reporters on this story: Maria Petrakis at mpetrakis@bloomberg.net;

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net.


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