With the deadline for Greece’s vital bond restructuring on Thursday, Greek Finance Minister Evangelos Venizelos has warned Athens’ private creditors to take what they are being offered as it is the best deal they will get.
Greece wants at least 90 percent of the investors to agree to swap their bonds for new ones, which means them taking a big loss, in the region of 74 percent.
“Whoever thinks that they will hold out and be paid in full, is mistaken,” he said. “We are ready to activate CACs (collective action clause to enforce losses) if needed,” Venizelos told Reuters.
“Our target is near universal participation,” he said. “No one should imagine that there will be a second offer that will include these elements.”
Venizelos said participation was impossible to gauge right now but investors should be putting in their responses by Wednesday.
Over the weekend the chief negotiator for the body representing private sector holders of Greek bonds expressed confidence.
“We can sense in our discussions with investors that momentum is building,” Charles Dallara, managing director of the International Institute of Finance (IIF), told Greece’s Antenna television in an interview.
“I’m quite optimistic that the participation levels will be quite high,” he said, but he declined to predict a figure.
Greece needs to cut its debt by 100 billion euros in order to meet the conditions of its bailout. If it fails to get enough support for a voluntary debt swap, it can — as a last resort — use the collective action clause legislation to force bondholders into taking writedowns, providing it has the support of two-thirds of investors.
A group of the biggest holders of Greek government debt said on Monday they would take part. Twelve banks, insurers, asset managers and hedge funds in the steering committee of the IIF said in a statement they would take part in the exchange.
They include BNP Paribas, Deutsche Bank, National Bank of Greece, Allianz and Greylock Capital Management.