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Greece Debt Buyback Program

Greece on Monday launched a 10-billion-euro (13 billion U.S. dollars) debt buyback program till Dec. 7 to ensure the release of crucial bailout aid and avoid a financial meltdown.

The country's Public Debt Management Agency (PDMA) made an offer to private holders to sell back state bonds at a discount as part of efforts to further reduce Greek sovereign debt and meet targets for its sustainability over the next decade.

Under the scheme, bondholders will be paid different purchase prices depending on the maturity of the bonds, starting from a minimum 30.2 percent of the bond's nominal value for 25-year and 30-year bonds to 40.1 percent for 10-year bonds. They will receive in exchange notes issued by the European Financial Stability Facility (EFSF).

The voluntary bond buyback procedure should be wrapped up by Dec. 17. "The invitation is designed to improve Greece's debt profile," the PDMA said.

However, heads of Greek banks and social funds, which hold some 20 billion euros in bonds and are eligible for the exchange, expressed skepticism over the plan.

Greek Finance Minister Yannis Stournaras is expected to brief his European counterparts with more details in a Euro Group meeting in Brussels scheduled for Monday.

The scheme follows a voluntary "haircut" of part of Greece's debt owned by private bondholders earlier this year which reduced the load by some 100 billion euros.

The success of the new plan key to unlocking new multi-billion euros rescue loans from European Union and International Monetary Fund lenders to avoid a disorderly default and possible exit from the eurozone.

The buyback program is part of the agreement reached last week in Brussels among creditors on the disbursement of the next 34 billion euros tranche of aid to Athens in December.

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