Voluntary debt restructuring: the 2017 Greek €29.6 billion bond exchange explained

This paper showcases the Greek 2017 liability management exercise as an example of a successful voluntary debt restructuring by a sovereign with active participation from both public and private sector creditors. The exercise, one of the largest in financial history, saw Greece restructure some €29.6 billion in outstanding debt to the ESM and EFSF using a bond exchange involving the four main Greek banks. The paper describes the exchange structure and the need to respect conflicting public policy objectives. It aims to contribute to the debate about sovereign debt restructuring generated by the IMF’s September 2020 discussion paper, The International Architecture for Resolving Sovereign Debt Involving Private-sector Creditors. It highlights how useful the ESM approach was in helping overcome financial difficulties by combining capital markets operations with stability support.