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Investors holding 58 percent of all Greek bonds eligible for the nation’s debt swap have so far agreed to participate. Greece’s largest banks, most of the country’s pension funds, and more than 30 European banks and insurers have indicated they’ll take part, all but guaranteeing the country will successfully pull off the biggest sovereign restructuring in history.
The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent. The total held by investors that have said they will participate is at least 120 billion euros. The Greek government has already said it will use collective action clauses to force bondholders into the swap if it gets sufficient approval from investors participating voluntarily. The government has said it wants participation above 90 percent and is seeking a minimum level of 75 percent.
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Greece’s six largest banks plan to accept the offer, as do Greek pension funds with about 17 billion euros of bonds between them. Thirty banks and insurers that were on the private creditor-investment committee for Greece plan to accept the swap. Together they hold an aggregate 81 billion euros of bonds, according to the Institute of International Finance.
Greece may have to compel the rest of its bondholders, but doing so would likely trigger insurance contracts on the debt, known as credit default swaps, analysts said. Forcing bondholders to joint could create “fallout in peripheral countries, including Spain and Italy,” said Marc Chandler, the head of global currency strategy at Brown Brothers Harriman in New York. Negative repercussions may also be felt by financial shares, he said.
Members of the IIF credit-investor committee that have agreed to participate are: Ageas, Allianz SE, Alpha Bank SA, Axa SA, La Banque Postale, Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), BNP Paribas, CNP Assurances SA, Commerzbank AG, Credit Agricole, Credit Foncier, DekaBank Deutsche Girozentrale, Deutsche Bank (NYSE:DB), Dexia SA, Emporiki Bank of Greece, EFG Eurobank, Generali, Greylock, Groupama SA, HSBC Holdings Plc (NYSE:HBC), ING Bank (NYSE:ING), Intesa Sanpaolo SpA, KBC Groep NV, Marfin Popular Bank Plc, Metlife Inc. (NYSE:MET), National Bank of Greece SA, Piraeus Bank SA, Royal Bank of Scotland (NYSE:RBS), Societe Generale SA, and Unicredit SpA.
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