Greek Finance Ministry Proposes Paying Bond Holdouts
ATHENS -- Greece's finance ministry has proposed that the country pay out bondholders who refused to participate in the country's recent debt restructuring, two senior government officials said Friday, as Greece faces an impending May 15 deadline to redeem a EUR450 million bond that wasn't included in the restructuring.
People familiar with the matter said the proposal has been submitted to the office of Prime Minister Lucas Papademos, who will confer with both the country's head of state later Friday and Greece's political party leaders before taking a final decision.
"The proposal from the finance ministry is for the redemption to be paid out," one government official told Dow Jones Newswires. "The caretaker government will have to decide this with the approval of the party leaders."
Although the amount of the upcoming redemption is small, it was the first of such bonds since the debt restructuring was completed. A move not to pay out those bondholders was seen as setting a worrying precedent for European debt markets that could further rattle investors. Instead, it suggests Greece will also pay out in full others holding a further EUR6 billion in Greek bonds that likewise weren't included in the restructuring.
Last month, Greece completed a mammoth debt restructuring demanded by its European partners and the International Monetary Fund in exchange for a new EUR130 billion bailout. Some EUR199 billion worth of Greek government debt has now been restructured, representing 96.9% of the EUR205.5 billion worth of government debt held by private-sector creditors.
But investors holding some EUR6 billion worth of Greek government bonds issued under foreign, not Greek, law, or bonds issued by Greek state-owned enterprises and guaranteed by the government, refused to participate in the debt writeoff.
The government had repeatedly warned holdouts that it won't give more favorable terms to investors that have snubbed the deal, and European officials have recently signalled they will back Greece if it decides not to pay them. But an outright default would also most likely touch off years of legal wrangling between the bondholders and the Greek government.
After inconclusive elections Sunday that left no party or coalition with a clear majority in parliament, Greece is facing the prospect of installing a caretaker government to lead it to fresh polls.
Before then, though, Papademos is expected to consult with party leaders on the issue of the bond holdouts. The meeting is expected Sunday.
But according to one government official, the finance ministry decided to recommend paying the holdouts so as to avoid passing on legal entanglements to the next government.
-By Costas Paris and Alkman Granitsas, Dow Jones Newswires; +30 210 373 1774 begin_of_the_skype_highlighting +30 210 373 1774 end_of_the_skype_highlighting; alkman.granitsas@dowjones.com
(END) Dow Jones Newswires
May 11, 2012 12:45 ET (16:45 GMT)
Keine Kommentare:
Kommentar veröffentlichen