Greece Faces Holdouts On Foreign Law Bond Swap

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The FINANCIAL — The majority of investors holding foreign law Greek bonds haven't yet been included in the country's debt swap deal as they have rejected or failed to agree to the exchange, said the country's debt agency Monday, setting a new deadline for the offer.

 

In a statement, the Public Debt Management Agency said investors holding 20 of the 36 bonds in question either voted down or otherwise failed to approve key changes to the bond contracts. These amendments would allow Greece to force the remaining investors into the deal. The statement came after a series of bondholder meetings held between March 27 to 29.

"The Republic accepted the effective amendment of all series where the extraordinary resolutions were approved by the requisite majority and re-opened the consent solicitation for all series where meetings have been adjourned to April 18," it said. The previous deadline was April 4.

According to Borsa Italiana – London Stock Exchange Group, the foreign law bond swap is part of Greece's overall debt restructuring, which saw more than EUR100 billion knocked off Greece's debt burden after investors accepted a haircut of 53.5% on Greek domestic law bonds.

Of the total debt being restructured, EUR177 billion are government bonds issued under the laws of Greece, about EUR10 billion are bonds issued by state-owned companies and guaranteed by Greece, and EUR18 billion are government bonds issued under the laws of foreign jurisdictions.

There are therefore around EUR9 billion of bonds belonging to creditors who could challenge the exchange through courts or arbitration panels.

Last week, euro-zone finance ministers issued a statement which hinted strongly that they would back Greece if it didn't make the payments on foreign law bonds.

On May 15, Greece must redeem one of those foreign law notes worth EUR450 million.

 

 

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