February 24, 2012
Here are a handful of the highlights:
- Greece says its bonds have an aggregate outstanding value of €206 billion
- It looks like 75% bondholder participation will be necessary for Greece to go through with the bond swap at all.
- Greece is seeking at least 90% participation in the bond swap—that would cause the collective action clause amendments go into effect
If at least 75% but less than 90% of the aggregate face amount of all bonds selected to participate in PSI are validly tendered for exchange, the Republic, in consultation with its official sector creditors, may proceed to exchange the tendered bonds without putting any of the proposed amendments into effect. However, if less than 75% of the aggregate face amount of the bonds selected to participate in PSI are validly tendered for exchange, and the Republic does not receive consents that would enable it to complete the proposed exchange with respect to bonds selected to participate in PSI representing at least 75% of the aggregate face amount of all bonds selected to participate in PSI, the Republic will not proceed with any of the transactions described above.What we think is happening here is that Greece is setting up three different possibilities (admittedly, we're still a little fuzzy on the details):
- If it gets 90% participation, the CAC clauses it passed yesterday will be written into the bonds but will not need to be activated. This would probably not trigger a credit event.
- If it gets 75-90% participation, it might decide to activate the CAC clauses, which probably would trigger a credit event.
- If Greece gets less than 75% participation in the debt swap then it's going to scrap the debt swap altogether.