Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history.
Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers including BNP Paribas (BNP) SA, Commerzbank AG (CBK) andAssicurazioni Generali SpA (G) have agreed to the offer. That brings the total to about 124 billion euros ($163 billion), based on data compiled by Bloomberg from company reports and government statements. The euro advanced in Asian trading.
The goal of the exchange is to decrease the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. While Greece would prefer a voluntary deal, the government has said it will use collective action clauses to force holders of Greek-law bonds into the swap if the so-called private sector involvement falls short and it gets sufficient approval from investors to change the bonds’ terms.
“Adding up the commitments to participate in the Greek PSI, it is now clear that the CAC hurdles will very likely be cleared,” Commerzbank’s head of fixed-income strategy, Christoph Rieger, said in a note yesterday. Under the rules of the exchange, investors holding at least 50 percent of the eligible bonds must vote on the swap, and 66 percent of those must agree to amend the bonds to enable the government to impose the collective action clauses, Rieger said.
The offer ends at 10 p.m. Athens time today. The 17-nation euro increased 0.1 percent to $1.3168 and 0.4 percent to 107.01 yen as of 1:37 p.m. in Tokyo.