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Euro crisis: An update on the Greek bond debacle: There is 68% participation of the entire €206 billion class. Hardly enough for the 75% participation rate.


The problem with the latest hare-brained scheme in Europe, namely to organize Greek bondholders among the various institutions that for 2 years did everything in their power to dump said Greek bonds in the open market, is that said institutions end up having no Greek bonds in inventoryjust at the time when they are supposed to have Greek bonds, 24 hours ahead of the Greek PSI deadline. As a reminder, participation in the PSI has to be 75%, with a CAC threshold of 66%,  and according to some interpretations even 50% of Greek bondholders voting for the PSI will be sufficient. Which means that with the PSI conclusion just around the corner, or 8 pm Athens time time tomorrow, the IIF, which is the consortium of entities that have every interest in perpetuating the status quo (i.e., do not have Europe ransom demands) and more than happy to “volunteer” for a 70%+ haircut, the IIF only has…

  • IIF SAYS MEMBERS PLEDGING SECURITIES EQUAL TO 39% OF EU206 BLN
  • IIF SAYS MEMBERS AMOUNTING TO EU81 BLN TO TAKE PART IN SWAP

So according to the IIF itself, 24 hours ahead of the deadline, it does not even have a majority of bondholders accounted for, let alone the plurailty needed for CAC trigger activation. Where are the other €145 billion in Greek bondholders? Why just call up Jeff Sabin at Bingham at 212.705.7747 and find out first hand.

Here is who has agreed to participate so far:

Ageas, Allianz SE, Alpha Bank SA, Axa SA, La Banque Postale, Banco Bilbao Vizcaya Argentaria SA, BNP Paribas SA, CNP Assurances SA, Commerzbank AG, Credit Agricole SA, Credit Foncier, Dekabank Deutsche Girozentrale, Deutsche Bank AG, Dexia SA, Emporiki Bank of Greece SA, Eurobank EFG, Assicurazioni Generali SpA, Greylock Capital Management, Groupama SA, HSBC Holdings Plc, ING Bank, Intesa Sanpaolo SpA, KBC Groep NV, Marfin Popular Bank Plc, Metlife Inc., National Bank of Greece SA, Piraeus Bank SA, Royal Bank of Scotland Group Plc, Societe Generale SA and Unicredit SpA.

More from Bloomberg:

Investors with holdings amounting to 39.3 percent of the Greek bonds eligible for the nation’s debt swap agreed to sign on, moving the country closer to the biggest sovereign restructuring in history.

 

The 30 members of the private creditor-investor committee for Greece who plan to participate in the swap hold an aggregate 81 billion euros ($106 billion) of bonds, according to an e- mailed statement from the Institute of International Finance today. The offer ends at 8 p.m. Athens time tomorrow.

 

The goal of the exchange is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years. The government said it will use collective action clauses to force holders of Greek-law bonds into the swap if necessary.

 

“I do fully expect to be part of the collective action clause,” Patrick Armstrong, managing partner at Armstrong Investment Managers in London, said today in a Bloomberg Television interview. He won’t voluntarily join in the swap because of the “minuscule” chance his bond maturing March 20 will be redeemed at face value.

 

Greece’s six largest banks plan to accept the offer, the Finance Ministry said late yesterday. Those lenders held about 42 billion euros of bonds eligible for the swap at the end of September, company reports show, making them crucial to the exchange. Greek pension funds with about 17 billion euros of debt will also join, Finance Minister Evangelos Venizelos said on Real FM Radio today

Now assuming that none of the banks have sold their bonds since Q3, and adding their holdings to the IIF’s assuming no doublecounting, means that at most there is 68% participation of the entire €206 billion class. Hardly enough for the 75% participation rate.

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