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Saturday 30 September 2023 Dublin: 8°C
Petros Giannakouris/AP
# Greek Bailout
12 major investors agree to write off parts of Greek debt
An organisation representing the biggest holders of Greek debt say they have agreed to a deal that paves the way for Greece’s second EU-IMF bailout.

A DOZEN BANKS, insurers and investment funds who own Greek government bonds have participate in a massive debt relief plan for the country, according to the body representing them in talks

The statement from the Institute of International Finance comes amid concern that not enough investors will voluntarily swap their Greek government bonds for new ones with a much lower face value, longer repayment deadlines and lower interest rates.

Private creditors have until Thursday night to sign up for the bond swap, which could slice as much as €107 billion off Greece’s €350 billion pile of national debt. Investors who participate would lose around 75 percent of the value of their overall bond holdings.

However, without the debt relief, Greece won’t get a second, €130 billion bailout from the other eurozone countries and the International Monetary Fund – and would default on its debts, likely leaving investors with much bigger losses.

The 12 big investors that have promised to participate in the plan include German insurer Allianz, French bank BNP Paribas, Germany’s Commerzbank and Deutsche Bank, as well as Greece’s Eurobank EFG and National Bank of Greece, the IIF said.

The banking group did not say how much Greek debt these institutions hold.

The participation of these investors doesn’t come as much of a surprise, as they were closely involved in negotiating the deal. Many of them also have close links to eurozone governments, which will be funding the bailout.

The bigger question will be whether less traditional bond investors, such as hedge funds that bought the bonds at a steep discount, will also sign up.

If not enough investors participate voluntarily, Greece has threatened to force losses on holdouts.

That, however, could trigger payouts on so-called credit default swaps — complex financial products that act as bond insurance — which the eurozone fears could cause panic on financial market.

Read: Eurozone finance ministers agree in principle on first Greek bailout payment

Watch: German finance minister plays Sudoku during Greek bailout debate

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