No preferential treatment for Greek investors in bond swap

Some 11,000 Greeks who invested some 3 billion euros in their government?s bonds over the last few years will not receive any extra compensation beyond the offer being made to all investors as part of Greece?s restructuring scheme, the head of the Eurogroup Jean-Claude Juncker said late on Monday.

The Luxembourg prime minister said that he discussed the issue with Greek Finance Minister Evangelos Venizelos at Monday?s Eurogroup meeting and received assurances that the government would not take any measures beyond the bond swap to soften the blow of the 53.5 percent haircut for Greek investors and savers.

Venizelos made minimal comment on the issue, suggesting that the matter might be discussed further.

?This is the decision of the Eurogroup,? said Venizelos. ?We will discuss the issue further in Athens.?

Ahead of the Private Sector Involvement, PSI, Venizelos had suggested that the 11,000 Greek investors might receive more favorable terms.

Speaking to Skai TV on Tuesday morning, Deputy Finance Minister Filippos Sachinidis refused to provide any guarantees of further compensation for Greek investors but did not rule out the possibility either.

?Mr Juncker expressed the view of the Eurogroup,? he said ?From the start, we said all the bonds would be part of the restructuring process. The question of what the Greek government will decide beyond that, we will see in the future.?

Sachinidis pointed out that Greece is likely to face legal action from foreign bondholders and would have to treat the issue of individual investors in Greece carefully.

?We cannot comment any further on that issue at the moment as we are due to face legal action from a number of bondholders,? he said. ?We have to protect Greece from legal action.?

Lawyers in Germany representing 110 Greek bond holders said on Monday they have formed a class action group and intend to sue banks and the Greek state following last week’s bond swap, Reuters reported.

The Hamburg legal firm said most of the investors had spent 100,000-500,000 euros on Greek paper, although the highest investment reached 3 million euros.

The suit, likely to be filed in Washington, will claim banks failed to properly advise clients about the risks of Greek paper and seek compensation.

Separately, lawyers will argue that Greece, in orchestrating a debt swap, infringed against a German-Greek investment treaty intended to protect German investors from political risk.

Lawyer Matthias Groepper of legal firm Groepper Koepke said those who had agreed to the terms of the debt swap would be unable to claim compensation.

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