The private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap required for an international bailout.
The 12 members of the creditors’ steering committee that said yesterday they would join in the exchange have debt with a face value of at least 40 billion euros ($53 billion), compared with the 206 billion euros of Greek bonds in private hands, according to data compiled by Bloomberg from company reports.
European officials are pressing investors to swallow the writedowns to avert even greater losses. The participating firms include some of Greece’s biggest creditors, including National Bank of Greece SA, Alpha Bank SA, BNP Paribas SA and Commerzbank AG. The goal of the swap, which runs through March 8, is to reduce by 53.5 percent the total of privately held Greek debt, helping avert an uncontrolled default that could roil markets and spur contagion to states such as Portugal.
“It’s in the interest of the private creditors as well as the international stability,” French European Affairs Minister Jean Leonetti said today in an interview in Paris. “All private creditors know it’s better to lose a little to win a lot rather than lose a lot later and win nothing. It’s better to lose 107 billion and win after in a more stable market.”
Only one steering-committee member, Landesbank Baden-Wuerttemberg, has still to back the offer, said the International Institute of Finance, which represents more than 450 financial-services companies globally and led debt-swap negotiations for private creditors. Germany’s DSW investor protection group separately advised private-sector bondholders to reject the offer.
A completion of the bond exchange is crucial to Europe’s efforts to turn the page on the Greek sovereign debt saga, which has dragged on for more than two years. The second rescue package, a 130 billion-euro bailout, depends on the swap’s outcome.
Greece is ready to force bondholders to participate if necessary, Finance Minister Evangelos Venizelos said in a Bloomberg Television interview with Nicole Itano in Athens.
“This is the best offer,” Venizelos said. “This is the best offer because this is the only one, the only existing offer.”
The Greek government has set a 75 percent participation rate as a threshold for proceeding with the transaction, in which investors will forgive more than half of their principal and exchange their remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility. Euro-area finance ministers last week authorized the EFSF to issue bonds for the swap.
Each debt holder “must make their own decision whether or not to participate in those offers based on their own particular interests and on the advice and assistance of their own advisers,” the Washington-based IIF said in a statement yesterday.
IIF Managing Director Charles Dallara and Jean Lemierre, a senior adviser to the chairman of Paris-based BNP Paribas, negotiated the debt swap on behalf of investors.
The other members of the steering committee that plan to accept the swap are Allianz SE, Axa SA, CNP Assurances, Deutsche Bank AG, EFG Eurobank Ergasias SA, Greylock Capital Management, ING Bank and Intesa Sanpaolo SpA, according to the statement from the IIF.
The 32 members of the IIF’s larger creditors’ committee -- which includes the steering committee -- have already taken at least 24 billion euros in combined writedowns on the country’s sovereign debt, data compiled by Bloomberg show.