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.
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
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.
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–Editors: Maria Petrakis, Dave Liedtka
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