Venizelos warns holdouts as IIF members back PSI

Greece warned private bondholders thinking of rejecting the offer for a debt restructuring deal not to do so as Athens edged closer on Monday to securing the level of participation it needs to be able to proceed with the private sector involvement plan, or PSI.

“Whoever thinks that they will hold out and be paid in full is mistaken,” Finance Minister Evangelos Venizelos told Reuters in an interview. “We are ready to activate CACs [collective action clauses] if needed.”

Bondholders have until 9 p.m. Central European Time on Thursday to accept the offer that Greece has made regarding more than 200 billion euros in debt. Following an agreement with its eurozone partners, Athens has proposed to its bondholders that they accept a nominal loss of 53.5 percent on their investments, which in real terms will mean taking a hit of about 74 percent.

The Institute of International Finance, which represented banks, asset managers, hedge funds and insurers during the negotiations with Greece ahead of the government making its offer, issued a statement on Monday saying that members of its steering committee would take part in the scheme voluntarily.

The committee members are: Allianz, Alpha Bank, AXA, BNP Paribas, CNP Assurances, Commerzbank, Deutsche Bank, Eurobank, Greylock Capital Management, ING Bank, Intesa Sanpaolo and the National Bank of Greece. It is thought they hold about 90 billion euros in Greek bonds.

“Neither the steering committee nor any of its members makes any recommendation or offers any advice to any other holder of PSI eligible debt,” the statement said. “Each such holder must make their own decision whether or not to participate in those offers based on their own particular interests and on the advice and assistance of their own advisers.”

Venizelos’s comments and the IIF’s announcement appear to be an attempt to build up some momentum in the bond swap ahead of this week’s deadline. If between 66 and 74 percent of bondholders sign up for the deal, Athens can force losses on the holdouts via the CACs.

Venizelos said he was confident the take-up would be above 90 percent. But if it is between 75 and 90 percent, Greece and its eurozone partners will have to discuss the pros and cons of enforcing CACs and triggering the payout of credit default swaps. 

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