Below is the Term Sheet which I would propose to the Eurogroup if I were in the shoes of Greece's Finance Minister:
Instrument: Two Bonds in equal amounts („A“ and „B“)
Issuing Date: June 30, 2015
Amount: The combined sum of Bonds “A” and “B” will be calculated as follows: (a) total bonds/loans (including interest accrued to June 30, 2015) on the books of the “Institutions”; plus (b) 7,2 BEUR (the last tranche of the current agreement); plus (c) an amount necessary to reduce the ECB’s funding of Greek banks to a level which the ECB can commit to make available on a sustained basis (if the ECB so requires)
Purpose: To prepay all loans from the institutions; to repurchase all Greek bonds at book value which the ECB and/or other Institutions hold; and to provide working capital for Greece.
Tenors: Bond “A” – 25 years
Bond “B” – 50 years
Interest: Greece commits to allocate 8% of its State Budget Net Revenue (tax revenue and privatization proceeds) to interest payments (10,8% in 2014). Approximately half thereof should suffice to pay interest on debt owed to private bondholders. The remainder is available to the Institutions.
Covenants: Reform steps and policies will be agreed with the Institutions whereby the Institutions have the decisional prerogative. Greece commits to honor all reforms and policy steps ‘mandated’ by the Institutions provided that the OECD can issue a ‘highly confident opinion’ that each such mandated step contributes to financial and economic stability and to economic growth.
New debt: Greece commits not to assume any new sovereign debt, except for the refinancing of bonds held by private creditors, without the approval of the Institutions.
And I would present it in due form and humility with respect for the Eurogroup.