PSI deal a window of opportunity for Greece, says Venizelos
Finance Minister Evangelos Venizelos described the completion of the offer for Greek bondholders to accept a major reduction in the amount they are owed as presenting Greece with a ?window of opportunity? to exit the crisis.
Venizelos was speaking after Athens confirmed that 95.7 percent of its privately-held bonds would undergo a haircut of 53.5 percent on their face value.
?We owed it to our children and grandchildren to rid them of the burden of this debt,? he said.
Venizelos said that the government?s target must now be to conduct structural reforms and ?fix the injustices?.
The minister said that investors who did not voluntarily taken part in the bond swap would be ?foolish? to believe that they will be able to claim the full value of their investments.
Venizelos also slammed the Greek pension funds that held back some 3.5 billion euros in bonds from the private sector involvement process, or PSI. He said they acted against the interest of their members and the country.
Greece is trying to reduce total privately-held debt of 206 billion euros through the restructuring scheme so it can qualify for a second bailout of 130 billion euros from the eurozone and International Monetary Fund.
Of the total privately-held debt, 177 billion euros has been issued under Greek law, 18 billion euros was issued under foreign law, 7 billion euros relates to bonds issued under Greek law by public enterprises (DEKOs) and 3 billion euros to DEKO bonds that were issued under foreign law. The latter two categories are guaranteed by the Greek government.
Of the 177 billion euros, 152 billion euros worth of bonds were submitted for a haircut that would reduce their net present value by about three quarters.
This represented an 85.8 percent representation rate and allowed Greece, which needed at least 66 percent of investors holding bonds written in Greek law to participate, to trigger collective action clauses (CACs) so all holders of these bonds would suffer losses.
Athens said that 20 of the remaining 29 billion euros was submitted to the swap. The investors holding the 9 billion euros have until the evening of March 23 to make their final decision.
?There will be no further opportunity for creditors holding those instruments to benefit from the package of the EFSF notes, co-financing and GDP linked securities which form an important and integral part of our invitations,? said Venizelos in a statement on Friday morning.
If any of these bondholders have DEKO bonds issued under Greek law, they could also be subject to the CACs but those who hold notes in other laws, predominantly UK legislation, could decide to hold out even though the face a long legal battle with no certainty of being paid in full at the end of it.
Reuters reported that some hedge fund which hold bonds issued by the Hellenic Railways Organization (OSE) believe that they have a strong legal case.
Despite the loose ends, the PSI announcement was greeted positively by European officials.
“The agreement with private creditors on the Greek debt swap is a big step towards stabilization and consolidation to a sustainable level of debt, which gives Greece a great opportunity», said German Finance Minister Wolfgang Schaeuble in a statement.
He added that the «troika» of the European Commission, European Central Bank and International Monetary Fund would assess whether the result met the requirements of the Eurogroup of eurozone finance ministers, which is due to hold a teleconference on Friday afternoon.
French Finance Minister, Francois Baroin said the participation in the debt swap was «good news.??It’s a good success,? he added.
?That contribution by the private sector is an indispensable element to ensure the future sustainability of the Greek public debt,? said EU Economic Affairs Commissioner Olli Rehn.
