Top lenders back Greek bond swap plan

Mon Mar 5, 2012 1:48pm EST
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By Sophie Sassard and Dina Kyriakidou

LONDON/ATHENS (Reuters) - Major Greek bondholders voiced their support on Monday for a deal that will more than halve the value of their holdings as their contribution to keeping the country afloat.

The steering committee of creditors, which includes 12 major investors in Greek bonds and was involved in drawing up last month's landmark deal, said it would accept the bond swap offer.

Earlier, Greek Finance Minister Evangelos Venizelos warned Athens' private creditors the bond exchange was the best deal they would get and that he would not hesitate to activate laws forcing losses on bond holders who did not willingly sign up.

"Whoever thinks that they will hold out and be paid in full, is mistaken," Venizelos told Reuters in an interview. "We are ready to activate CACs (collective action clause to enforce losses) if needed," he told Reuters in an interview.

Greece and its creditors are in the final stages of talks aimed at a deal that would cancel more than 100 billion euros ($132 billion) of its private sector debts - a key part of a 130 billion euros bailout, the second rescue Athens has required.

The lenders, mainly banks, insurers and investment institutions, have to reveal their intentions by Thursday night.

The latest move is seen as an attempt to build up momentum before the deadline, and follows weekend comments from the Institute of International Finance (IIF) bank lobby group that it was confident the bond swap would be completed this week.

Greece is expected to deploy collective action clauses to compel those who decline the offer to take the loss on the value of their bonds.   Continued...

A Greek (R) and an EU flag fly over the Greece's Finance Ministry in Athens November 3, 2011.   REUTERS/Yannis Behrakis