(BN) Greece Plans to Make PSI Binding With No Cash for Holdouts

This article is a bit confusing to me.  They will either CAC all holdouts or default on holdouts as payments become due and payable.  This makes it sound like they will CAC holdouts to    zero.  I do not believe that is possible, even under their new laws.  Collective Action should only allow Greece to force holdouts to accept the deal the “collective” agreed to.  They can do that, or they can refuse to pay as bonds become due. That in my opinion will spook the market even more than using PSI on holdouts.  But in a world where the law is easily changed, it is hard to rely on it for any analysis.

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BFW 03/06 14:06 Greece Says April 11 Deadline for Foreign Law Bonds

BFW 03/06 14:02 Greek Finance Ministry Says Expiry for Debt Swap Is March 8

 BN 03/06 14:04 *GREEK FINANCE MINISTRY COMMENTED IN EMAILED STATEMENT

 BN 03/06 14:04 *GREECE SAYS OFFICIAL SECTOR WON’T PROVIDE FUNDS IF SWAP FAILS

 BN 03/06 14:03 *GREECE SAYS WILL BIND HOLDERS OF GREEK BONDS IF GIVEN CONSENTS

 BN 03/06 14:02 *GREECE SAYS APRIL 11 DEADLINE FOR FOREIGN LAW BONDS

 BN 03/06 14:01 *GREEK FINANCE MINISTRY SAYS EXPIRY FOR DEBT SWAP IS MARCH 8

 BN 03/06 14:00 *GREEK DEBT CHIEF ATTENDED FRANKFURT MEETING

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Greece Plans to Make PSI Binding With No Cash for Holdouts (1)

2012-03-06 16:37:25.756 GMT

     (Updates with quotes from statement in third, fourth

paragraphs, Greek note price in fifth.)

 

By Paul Dobson

     March 6 (Bloomberg) — Greece will use collective action

clauses to bind holders of Greek-law bonds to accept a debt swap

if it receives sufficient consents, according to an e-mailed

statement from the Athens-based Finance Ministry today.

     Petros Christodoulou, the director general of the Public

Debt Management Agency, outlined the country’s ongoing debt swap

at a meeting in Frankfurt yesterday, according to the e-mail.

The nation’s “economic program” doesn’t include any provisions

for investors unwilling to take part in the private-sector

involvement of its debt-reduction plan, it said.

     “The Republic confirmed that if it receives sufficient

consents to the proposed amendments of the Greek-law governed

bonds identified in the invitations for the amendments to become

effective, it intends, in consultation with its official-sector

creditors, to declare the proposed amendments effective and

binding on all holders of these bonds,” the statement said.

     “The Republic’s representative noted that Greece’s

economic program does not contemplate the availability of funds

to make payments to private-sector creditors that decline to

participate in PSI,” according to the statement.

     The price of the 4.3 percent notes maturing on March 20

rose from a record low today, climbing to 22 percent of face

amount at 4:24 p.m. London time, from 20.5 yesterday.

     Greece said that if the debt swap wasn’t successful, “the

official sector will not finance Greece’s economic program and

Greece will need to restructure its debt” on different terms to

those set out in the current invitation.

     The deadline for bondholders to accept the invitation is

March 8, while those with foreign-law government bonds have

until April 11, according to the statement.

 

For Related News and Information:

Top Stories: TOP<GO>

More Debt Crisis News: EXT4 <GO>

 

–Editors: Maria Petrakis, Dave Liedtka

 

To contact the reporter on this story:

Paul Dobson in London at +44-20-7673-2041 or

pdobson2@bloomberg.net

 

To contact the editor responsible for this story:

Daniel Tilles at +44-20-7673-2649 or dtilles@bloomberg.net