nor were any contractual measures taken to coerce the holders of the guaranteed bonds into participating in the transaction.

The Greek Case
In the spring of 2012, the Hellenic Republic restructured approximately €206 billion of its bond indebtedness in the hands of private sector creditors, the largest sovereign debt restructuring in history. More than 130 separate series of bonds were declared eligible to participate in this restructuring including 36 series of bonds bearing the express guarantee of the Hellenic Republic. The Hellenic Republic offered no special compensation (over and above the consideration offered to holders of direct Hellenic Republic bonds) to the holders of guaranteed bonds in return for the surrender of the holders’ claims against the primary obligors, nor were any contractual measures taken to coerce the holders of the guaranteed bonds into participating in the transaction.

At the time of this debt restructuring, the Hellenic Republic had put its guarantee on hundreds of outstanding debt instruments (loans and bonds), but only 36 were declared eligible to participate in the 2012 restructuring. One of the criteria used by the Republic to select these 36 series of bonds was their classification by Eurostat (the statistical office of the European Union) as “central government debt” for Eurostat reporting purposes.
Preventive Measures


DRAFT
12/26/12
Restructuring a Sovereign Debtor’s Contingent Liabilities
Lee C. Buchheit Mitu Gulati
Abstract