Investors with holdings amounting to 39.3 percent of the Greek bonds eligible for the nation's debt swap agreed to sign on, moving the country closer to the biggest sovereign restructuring in history.
The 30 members of the private creditor-investor committee for Greece who plan to participate in the swap hold an aggregate 81 billion euros ($106 billion) of bonds, according to an e-mailed statement from the Institute of International Finance today. The offer ends at 8 p.m. Athens time tomorrow.
The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. The government said it will use collective action clauses to force holders of Greek-law bonds into the swap if necessary.
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"I do fully expect to be part of the collective action clause," Patrick Armstrong, managing partner at Armstrong Investment Managers in London, said today in a Bloomberg Television interview. He won't voluntarily join in the swap because of the "minuscule" chance his bond maturing March 20 will be redeemed at face value.
Greece's six largest banks plan to accept the offer, the Finance Ministry said late yesterday. Those lenders held about 42 billion euros of bonds eligible for the swap at the end of September, company reports show, making them crucial to the exchange. Greek pension funds with about 17 billion euros of debt will also join, Finance Minister Evangelos Venizelos said on Real FM Radio today.
Greece expects bondholders to accept the offer and is ready to force them to participate if necessary, Venizelos said in a Bloomberg Television interview in Athens this week. Compelling holdouts to take part will likely trigger insurance contracts on the debt known as credit default swaps, analysts said.
If Greece forces bondholders to join, there "is likely be fallout in the peripheral countries, including Spain and Italy," Marc Chandler, the head of global currency strategy at Brown Brothers Harriman in New York, said in a note. There may also be negative repercussions for financial shares, he said.
'Turning Point'
The members of the IIF creditor-investor committee who agreed to participate are Ageas, Allianz SE, Alpha Bank SA, Axa SA, La Banque Postale, Banco Bilbao Vizcaya Argentaria SA, BNP Paribas SA, CNP Assurances SA, Commerzbank AG, Credit Agricole SA, Credit Foncier, Dekabank Deutsche Girozentrale, Deutsche Bank AG, Dexia SA, Emporiki Bank of Greece SA, Eurobank EFG, Assicurazioni Generali SpA, Greylock Capital Management, Groupama SA, HSBC Holdings Plc, ING Bank, Intesa Sanpaolo SpA, KBC Groep NV, Marfin Popular Bank Plc, Metlife Inc., National Bank of Greece SA, Piraeus Bank SA, Royal Bank of Scotland Group Plc, Societe Generale SA and Unicredit SpA.
Charles Dallara, managing director of the IIF, led negotiations for private creditors in the debt-swap discussions. The Washington, D.C.-based trade group represents more than 450 financial-services companies globally.
"This will, I think, be a moment for a real turning of the page and allowing Greece to regain some economic vitality, and also I think contributing further to the overall stability and sense of confidence in the euro zone," Dallara said in a telephone interview today.
Bloomberg
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