“Greece will pay the bond that matures on May-15, including interest rates” the finance Ministry said Tuesday in a statement. “This bond is part of bonds amounting 6.4 billion euros that were not offered to participate in the Greek Bond Swap (PSI) by their holders. The decision was carefully taken after thorough consideration of the relevant factors and implications and the current situation. Today’s decision does not prejudge future decisions on the treatment of the remaining bonds that were not offered for exchange,” the statement concluded.
The bond worth 435 million euro was under British Law.
However the decision for bond payment, infuriates investors and banks who volunterily participated in the PSI. Not to mention the small investors in Greece, who failed in the Greek government trap and invested life-savings in Greek bonds but saw their value cut into half after an enforced PSI. Or the assets of Greek insurance funds or state suppliers who were paid in Greek bonds.
Reuters wrote about investors’ frustration:
“In an about-face, Greece opted to pay holders of 430 million euros ($552 million) of a May 15 bond, despite having told those who took its bond swap offer in March that they would otherwise get nothing, government officials told Reuters on Tuesday.
The decision averts litigation by the bondholders, and will infuriate the 96.9 percent of creditors, mainly European banks, who agreed to take the deal.
“Greece’s strategy has been to openly say that it won’t pay holdouts, possibly in the hope at least some of them would go away,” said Steven Friel at legal firm Brown Rudnick, who advises creditors holding other Greek bonds that were not exchanged under the swap.
“This decision sets a commercial, if not a legal, precedent that they are willing to meet their obligations to pay bondholders in full for the other international law bonds that will mature in coming years,” he said.
A source close to private creditors involved in the swap, who declined to be identified, called it “scandalous” and wished Greece “good luck for the next restructuring.”
Further Reading REUTERS
The Reuters story was published before the Finance Ministry statement, but there were signs since the morning that Greece would pay.
