Filenews 25 April 2025
In addition to the gradual repayment of the loans of the first memorandum, Greece, and in particular the Hellenic Debt Agency, is also deactivating the warrants, with a GDP clause that those who participated in the PSI received in 2012 as a "sweetener", which promised a higher yield than the "haircut" Greek government securities.
These composite products were given to the bondholders who participated in the haircut of the Greek debt as an extra incentive to say "yes". Now, however, they are in danger of being activated within the next two years, forcing the Ministry of Finance to pay up to €500 million, additional euros for the interest on servicing the public debt until 2042, when all PSI bonds mature.
These securities were higher-yielding securities than the haircut bonds. Whoever held these rights would receive a 1% higher interest rate each year on PSI bonds with a nominal value of €60 billion. The activation of the warrants had two conditions: The first was that the growth rate of the economy should be above 2%. The second was that the GDP exceeded €266 million. The first of the conditions is consistently fulfilled from 2021 to 2024, while the second, i.e. to increase GDP to €266 billion at current prices from €237 billion which arrived in 2024, is a matter of two years at most. With the fulfilment of these two conditions, the warrants will be activated and the state would have to pay every year about €500-600 million more interest on warrants with a GDP clause.
Acquisition with €160 million
In the direction of avoiding an increase in interest paid, the Hellenic Chamber of Commerce will acquire these rights for €160 million in May, deactivating the associated risk.
Warrants are securities traded on the bond markets. The price on the basis of which the acquisition will be made results from the average of the last 30 days and leads to the amount that the Greek state will have to pay, i.e. approximately €160 million.
The Greek state's right to purchase is binding on the holders of the warrants, who will collect the amount mentioned above and will lose the right to hope for the collection of mammoth interest for the period up to and including 2042, when the validity of these securities expires.
For the rest, the Ministry of Finance continues their dynamic debt management operations, looking for new opportunities to improve the profile of the Greek debt.
As is well known, Greece repaid early in 2022 the last €8.5 billion from the loans it had taken from the IMF. Of the loans of the first memorandum, only the bilateral loan with the Eurozone member states, codenamed Greek Loan Facility (GLF), is outstanding. Of this loan, Greece has repaid early 7 instalments for a total amount of €18.55 billion which cover instalments until 2032. In particular, it repaid two double instalments of €5.3 billion each, in 2022 and 2023 and a triple tranche of €7.93 billion at the end of 2024. The target is the remaining €34.55 billion. The loan will be repaid from this year until the end of 2031, with the beginning of this year, with the repayment of another instalment of €5.3 billion.
