Greece extends bond swap deadline again for holdouts

Thu Apr 5, 2012 10:26am EDT
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By George Georgiopoulos and Lefteris Papadimas

ATHENS (Reuters) - Greece extended a deadline for a second time on Thursday for remaining bondholders to accept a debt swap, giving Athens a little more breathing space to formulate a response to investors who have refused to sign up for the landmark deal.

Athens must in any case make a decision soon, in coordination with its EU and IMF backers, because a 450 million euro bond expires on May 15, finance ministry and banking officials said.

Completion of the bulk of the swap allowed Greece to get a new EU/IMF bailout last month and has helped ease market concerns over the euro zone debt crisis, at least for now.

But how Greece deals with the remaining investors is likely to set an important precedent for other highly indebted euro zone states and "vulture funds" who buy distressed government debt in the hope of securing a bigger payout in courts.

Athens gave investors on Thursday until April 20 to join in, extending a deadline that had already been moved back once to April 4.

A majority of investors have already rejected the debt swap for the May 15 bond, a finance ministry official said. But they cannot derail the overall debt swap plan - the biggest debt restructuring in history - which has now been accepted by about 97 percent of investors.

A source familiar with the talks said that the majority of the bonds maturing in May are in the hands of activist shareholder Elliott Advisors, which is well-known for contesting previous sovereign debt restructurings in Latin America. Elliott declined to comment.

Greece has said it cannot afford to fully pay holdouts and that the swap deal that domestic-law bound bondholders were forced to accept last month is the best available offer.   Continued...

Greek bondholders and members from communist-affiliated trade union PAME protest against their inclusion in a debt cut plan that saw the value of their bonds diminished, outside the Bank of Greece in Athens, April 5, 2012. REUTERS/John Kolesidis