Greece officials must decide by May 15 if they are going to repay the 436 million euros due on a floating-rate note issued a decade ago, or default.

Greece made Tuesday’s interest payment on 20 billion yen (192 million euros) of 4.5 percent notes maturing in 2016, Petros Christodoulou (photo), the head of the Greek Debt Management Agency in Athens, said in an e-mail.

These are among about 7 billion euros of bonds whose holders took advantage of being governed by foreign rather than Greek law to sidestep losses suffered under the private sector involvement rescheduling, or PSI.

Paying the holdouts in full would arouse the ire of Greek taxpayers, as well as investors who cooperated with PSI.

A failure to pay would signal Europe’s debt crisis is worsening.

“This poses a real challenge to the Greek government,” said Mario Blejer, vice chairman of Banco Hipotecario SA in Buenos Aires, who ran Argentina’s central bank in the aftermath of his country’s default.

“If they pay, the new emerging government will be fiercely criticized for paying the foreigners in full after imposing huge losses on small domestic savers. If they don’t pay, they can expect much litigation, as we have experienced here in Argentina.”

[Bloomberg] - Ekathimerini.com