Greek Bondholder Seeks Payment or Collateral Citing Finnish Deal
(See EXT4 for more on the euro crisis.)
May 23 (Bloomberg) -- A holder of Greek bonds that weren’t settled
in the biggest-ever debt restructuring said he’ll demand immediate
payment unless the government posts collateral against his investment.
Rolf Koch, a private investor who says he holds 500,000 Swiss
francs ($528,000) of the notes due in July 2013, argued that he’s
entitled to equal treatment with Finland, which made getting collateral a
condition of contributing to Greece’s second bailout. He wrote to the
paying agent, Credit Suisse Group AG, invoking the bonds’ so-called
negative-pledge clause, according to the text of a letter seen by
Bloomberg News.
Greece issued the Swiss-franc bonds in 2005 under international
rather than domestic law, which allowed holders to sidestep the more
than 50 percent losses suffered by other investors in last month’s debt
restructuring. If Koch is successful, other investors may follow his
lead by claiming that the concession gained by Finland breaches the
requirement that fresh debt doesn’t win priority over existing bonds.
“They broke the negative pledge when they gave collateral to
Finland,” Koch said in a phone interview yesterday from Muehltal,
Germany. “Now they should offer the same to me or pay me back.”
Unattractive Deal
Finland’s insistence on getting collateral last August threatened
to derail the Greek bailout as other euro members sought similar terms.
In the end, Finland had to abandon a bilateral deal with Greece that
granted it cash security and accept an arrangement unattractive enough
to deter imitators.
The deal involves the Nordic country speeding up its payments to
Europe’s rescue fund. The collateral it receives is in the form of
triple-A rated bonds due in 15 years to 30 years, paid for by a trustee
selling Greek government notes transferred to it from domestic banks.
This arrangement also allows Greece’s government to deny involvement.
“There is no involvement of the Hellenic Republic,” Petros
Christodoulou, the head of the Public Debt Management Agency in Athens,
said in an e-mail yesterday. Adam Bradbery, a London-based spokesman at
Credit Suisse, said he was unable to comment.
Finland’s agreement, full details of which weren’t made public,
won’t trigger negative-pledge clauses on Greek government bonds, the
Finnish Finance Ministry said on Oct. 3.
There are 7 billion euros ($8.9 billion) of international bonds
issued or guaranteed by Greece still outstanding after the sovereign
restructuring, according to data compiled by Bloomberg.
--Editors: Paul Armstrong, Andrew Reierson
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