The days ahead are «crucial» and of «historical significance,» Greek Finance Minister Evangelos Venizelos said on Wednesday, as a deadline for Athens to reach an agreement over private sector involvement, or PSI, in a writedown of Greek debt will determine whether the cash-strapped country will receive 130 billion euros in bailout loans.
«What is happening right now is of historical significance. It will change the profile of our debt, it will alter the factors in play,» Venizelos told Real FM radio. «It will help the nation’s economy breathe, and the sacrifices of the citizens, who have seen their salaries and pensions decrease, will begin to show benefits,» the finance minister added.
On Tuesday, Greece?s six biggest banks confirmed that they would take part in the bond swap proposed by the government but several pension funds said they would not, despite the government preparing to offer holdouts worse terms than those who join the scheme.
«Their [the banks’] participation is crucial,» Venizelos said, adding that the decision by the pensions funds that have decided not to participate «is damaging to the national interest and to the interest of the funds, as well as to the interests of their pensioners and workers.»
Four pension funds, which hold about 2 billion euros of Greek debt, said they would not take part in the deal. Eight funds that own 2.7 billion euros of debt said they would take part in the restructuring.
«If the PSI deal fails then what will their bonds be worth? Zero,» the finance minister said of the decision by the four funds not to participate.
National Bank of Greece, Eurobank, Alpha, Piraeus, Hellenic Postbank and ATEbank hold roughly 40 billion of about 200 billion euros in bonds that are due for a face value haircut of 53.5 percent.
Bondholders have until Wednesday night to declare whether they will take part in the restructuring.
Of the total privately held debt, 177 billion euros of bonds are written under Greek law. Greece is hoping that at least 66 percent of bonds, or 117 billion euros, will be put forward for a haircut. If this happens, Athens will be able to activate the collective action clauses (CACs) that allow it to impose the debt swap on the remaining bondholders. The Greek government believes the take-up rate will be between 75 and 80 percent.
The finance minister was upbeat about the prospects of the PSI deal, adding that he expects Greek debt to reach 120 percent of gross domestic product by 2020, «if not better.»