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Venizelos: Greek Debt Swap Best, Only Offer

Monday, March 5, 2012

Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said.

“This is the best offer,” Venizelos said in a Bloomberg Television interview with Nicole Itano in Athens today. “This is the best offer because this is the only one, the only existing offer.”

European leaders are facing the first test of their attempt to turn the page on the two-year debt crisis as Greece’s private creditors decide whether to sign off on the biggest sovereign- debt restructuring in history. The success of the 106 billion- euro swap, confirmed on the eve of last week’s European summit, depends on how many investors agree to the writedown by the March 8 deadline.

“This is the critical week,” Venizelos said.

Twelve banks and investors represented on the steering committee of the Institute of International Finance, the body that negotiated the swap with the government, said today that they planned to take up the offer. They include companies with the largest holdings of Greek government bonds such as National Bank of Greece SA (ETE), BNP Paribas (BNP), Commerzbank AG (CBK) and Deutsche Bank AG, an e-mailed statement from the Washington-based IIF said.

Only one steering-committee member, Landesbank Baden- Wuerttemberg, has still to back the offer, said the IIF, which represents more than 450 financial-services companies globally. Germany’s DSW investor protection group meanwhile advised private-sector bondholders to reject the offer.

Participation Rate

The Greek government has set a 75 percent participation rate as a threshold for proceeding with the transaction, in which investors will forgive 53.5 percent 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.

Erik Nielsen, chief global economist at UniCredit SpA in London, said enough creditors will probably participate in the writedown to avoid triggering so-called collective action clauses, which could be used by Greece to compel investors to participate and roil markets by triggering credit-default swap insurance contracts. Euro-area finance ministers will hold a teleconference on March 9 to review the deal’s outcome.

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