Greece has extended, for a second time, a deadline for its remaining holders of government bonds to accept a debt swap which is essential for its bailout. They now have until 20 April.
That gives Athens more time to come up with a response to those investors who are refusing to sign up for the deal.
Greece also said that next week it will exchange 20.27 billion euros of bonds in the next stage of the swap.
Greece has said it cannot afford to fully pay the holdouts and that the swap deal domestic-law bondholders were forced to accept last month is the best available offer.
The government is left with three options to confront those bondholders still resisting – continue to service the bonds, default and trigger litigation or come up with a new offer while ensuring fair treatment for those that accepted the swap.
Authorities have not decided on a course of action, but none of the outcomes would cause the broader bond swap deal – agreed last month with private sector creditors and a prerequisite for keeping the country solvent – to unravel.
The outcome for those who do not participate will likely set an important precedent in what is Western Europe’s first sovereign debt restructuring in decades.