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Greece pays Finland Collateral click here
Greek Bondholder Seeks Payment or Collateral Citing Finnish Deal
2012-05-23 08:16:14.99 GMT
(See EXT4 for more on the euro crisis.)
By John Glover
May 23 (Bloomberg) -- A holder of Greek bonds that weren’t
settled in the biggest-ever debt restructuring said he’ll demand
immediate payment unless the government posts collateral against
his investment.
Rolf Koch, a private investor who says he holds 500,000
Swiss francs ($528,000) of the notes due in July 2013, argued
that he’s entitled to equal treatment with Finland, which made
getting collateral a condition of contributing to Greece’s
second bailout. He wrote to the paying agent, Credit Suisse
Group AG, invoking the bonds’ so-called negative-pledge clause,
according to the text of a letter seen by Bloomberg News.
Greece issued the Swiss-franc bonds in 2005 under
international rather than domestic law, which allowed holders to
sidestep the more than 50 percent losses suffered by other
investors in last month’s debt restructuring. If Koch is
successful, other investors may follow his lead by claiming that
the concession gained by Finland breaches the requirement that
fresh debt doesn’t win priority over existing bonds.
“They broke the negative pledge when they gave collateral
to Finland,” Koch said in a phone interview yesterday from
Muehltal, Germany. “Now they should offer the same to me or pay
me back.”
Unattractive Deal
Finland’s insistence on getting collateral last August
threatened to derail the Greek bailout as other euro members
sought similar terms. In the end, Finland had to abandon a
bilateral deal with Greece that granted it cash security and
accept an arrangement unattractive enough to deter imitators.
The deal involves the Nordic country speeding up its
payments to Europe’s rescue fund. The collateral it receives is
in the form of triple-A rated bonds due in 15 years to 30 years,
paid for by a trustee selling Greek government notes transferred
to it from domestic banks. This arrangement also allows Greece’s
government to deny involvement.
“There is no involvement of the Hellenic Republic,”
Petros Christodoulou, the head of the Public Debt Management
Agency in Athens, said in an e-mail yesterday. Adam Bradbery, a
London-based spokesman at Credit Suisse, said he was unable to
comment.
Finland’s agreement, full details of which weren’t made
public, won’t trigger negative-pledge clauses on Greek
government bonds, the Finnish Finance Ministry said on Oct. 3.
There are 7 billion euros ($8.9 billion) of international
bonds issued or guaranteed by Greece still outstanding after the
sovereign restructuring, according to data compiled by
Bloomberg.
For Related News and Information:
Top bond stories: TOP BON <GO>
Top financial news: TOP FIN <GO>
Greek private-sector involvement: GPSI <GO>
Greece pays Finland Collateral click here
Greek Bondholder Seeks Payment or Collateral Citing Finnish Deal
2012-05-23 08:16:14.99 GMT
(See EXT4 for more on the euro crisis.)
By John Glover
May 23 (Bloomberg) -- A holder of Greek bonds that weren’t
settled in the biggest-ever debt restructuring said he’ll demand
immediate payment unless the government posts collateral against
his investment.
Rolf Koch, a private investor who says he holds 500,000
Swiss francs ($528,000) of the notes due in July 2013, argued
that he’s entitled to equal treatment with Finland, which made
getting collateral a condition of contributing to Greece’s
second bailout. He wrote to the paying agent, Credit Suisse
Group AG, invoking the bonds’ so-called negative-pledge clause,
according to the text of a letter seen by Bloomberg News.
Greece issued the Swiss-franc bonds in 2005 under
international rather than domestic law, which allowed holders to
sidestep the more than 50 percent losses suffered by other
investors in last month’s debt restructuring. If Koch is
successful, other investors may follow his lead by claiming that
the concession gained by Finland breaches the requirement that
fresh debt doesn’t win priority over existing bonds.
“They broke the negative pledge when they gave collateral
to Finland,” Koch said in a phone interview yesterday from
Muehltal, Germany. “Now they should offer the same to me or pay
me back.”
Unattractive Deal
Finland’s insistence on getting collateral last August
threatened to derail the Greek bailout as other euro members
sought similar terms. In the end, Finland had to abandon a
bilateral deal with Greece that granted it cash security and
accept an arrangement unattractive enough to deter imitators.
The deal involves the Nordic country speeding up its
payments to Europe’s rescue fund. The collateral it receives is
in the form of triple-A rated bonds due in 15 years to 30 years,
paid for by a trustee selling Greek government notes transferred
to it from domestic banks. This arrangement also allows Greece’s
government to deny involvement.
“There is no involvement of the Hellenic Republic,”
Petros Christodoulou, the head of the Public Debt Management
Agency in Athens, said in an e-mail yesterday. Adam Bradbery, a
London-based spokesman at Credit Suisse, said he was unable to
comment.
Finland’s agreement, full details of which weren’t made
public, won’t trigger negative-pledge clauses on Greek
government bonds, the Finnish Finance Ministry said on Oct. 3.
There are 7 billion euros ($8.9 billion) of international
bonds issued or guaranteed by Greece still outstanding after the
sovereign restructuring, according to data compiled by
Bloomberg.
For Related News and Information:
Top bond stories: TOP BON <GO>
Top financial news: TOP FIN <GO>
Greek private-sector involvement: GPSI <GO>
