Private Creditors Prepare For Greek Bond Swap

Greece is waiting for their private bond holders to accept to the terms of a new Greek bond swap that includes their bond holders taking a 53.5 % cut of the debt total before Greece is allowed to receive their second rescue package of 130 billion euros on March 20th.

The Greek bond swap deal involves 450 financial institutions holding $206 billion euros of Greek bonds. Bond holders are asked to exchange their old bonds by Thursday evening for a new package of bonds and cash that would cut approximately 100 billion euros of Greek debt. 

Some of the private Greek bond holders have  shown reluctance to accept the new terms of the bond swap, the largest debt restructuring program in history, although Greece’s Finance Minister Evangelos Venizelos told Bloomberg’s Nicole Itano that are no other offers available to them.

“This is the best offer because this is the only one, the only existing offer” Venizelos said.  

Twelve financial institutions representing the Steering Committee of Greek Creditors holding a sizeable portion of the Greek debt have already agreed to accept the voluntary 53.5% cut.  They are holding Greek bonds with a total nominal value of 40 billion euros.

Greece needs to secure at least 90% participation for their bond exchange to proceed.

If less than 90% of bond holders participate in the voluntary bond swap, Greece has the option of invoking a clause to force remaining bond holders to accept the deal.

But for that to occur, at least half of the bond holders must participate in a vote with at least two thirds voting in favor of the new bond-swap terms which includes the 53.5% cut.

European Market

European equities are trading lower this morning in early trading. European banks parked 827.7 billion euros overnight at the ECB, a new record. Yesterday it was announced that Euro banks parked 820 billion euros at the ECB, a previous record. 




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