Edging closer to PSI deal

Greece’s six biggest banks confirmed Tuesday that they would take part in the bond swap proposed by the government but several pension funds said they would not, despite the government preparing to offer holdouts worse terms than those who join the scheme.

Representatives of National Bank of Greece, Eurobank, Alpha, Piraeus, Hellenic Postbank and ATEbank met with Finance Minister Evangelos Venizelos to inform him that they would participate in the private sector involvement plan, or PSI, part of Greece’s new bailout.

The six banks hold roughly 40 billion of about 200 billion euros in bonds that are due for a face value haircut of 53.5 percent. Bondholders have until Wednesday night to declare whether they will take part in the restructuring.

Of the total privately held debt, 177 billion euros of bonds are written under Greek law. Greece is hoping that at least 66 percent of bonds, or 117 billion euros, will be put forward for a haircut. If this happens, Athens will be able to activate the collective action clauses (CACs) that allow it to impose the debt swap on the remaining bondholders. The Greek government believes the take-up rate will be between 75 and 80 percent.

Greece’s Public Debt Management Agency (PDMA) issued a statement Tuesday making it clear that Athens has no intention of honoring any bonds that are not volunteered for a haircut. “Greece’s economic program does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in PSI,” it said.

Sources told Kathimerini that holdouts will either be offered a much more onerous deal than those who take part in the restructuring or they will not be offered new bonds as sweeteners.

Nevertheless, four pension funds, which hold about 2 billion euros of Greek debt, said they would not take part in the deal. Eight funds that own 2.7 billion euros of debt said they would take part in the restructuring.

Kathimerini understands that there is a possibility that bondholders may be given longer to consider whether they will take part in the restructuring, but Public Debt Management Agency head Petros Christodoulou denied that the date was being pushed back. “I confirm that the deadline is March 8,” he told Reuters.

“With the successful completion of the bond swap, we will begin a new chapter for our country,” Bank of Greece Governor Giorgos Provopoulos said after seeing President Karolos Papoulias.


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