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Greek Finance Minister: We are Ready to Activate CACs

Greek Finance Minister Evangelos Venizelos warned Athens’ private creditors on Monday not to hold out but take the bond swap on which a second bailout of the debt-ridden country depends because it was the best deal they would get.
Venizelos told Reuters in an interview three days before the exchange offer expires, that the terms hammered out last month after months of tortuous negotiations were favourable and Greece 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,” he said. “We are ready to activate CACs (collective action clause to enforce losses) if needed,” he said.
The deal clinched by euro zone finance ministers in the early hours of February 21 involves investors taking a nominal 53.5 percent loss, which equates to a real 73-74 percent loss, on their Greek bonds in a deal aimed at rescuing Greece from a chaotic default by cutting its debt mountain by around 100 billion euros.
Venizelos said he was optimistic participation would be over 90 percent, with investors lured by the sweeteners offered – a cash equivalent upfront payment, a new bond issued under English law, a GDP warrant offering higher interest if the Greek economy does better than expected and equal treatment for the new bonds with the public sector.
“Our target is near universal participation,” he said. “No one should imagine that there will be a second offer that will include these elements.”
Venizelos said participation was impossible to gauge right now but investors should be putting in their responses by Wednesday.
Greece has said it wants 90 percent take up. If it falls below that but exceeds 75 percent, it will consult with its EU and IMF partners on how to fill the gap, with or without activating CACs. Below that level, the deal would be off, potentially plunging the euro zone back into crisis.
A group of the biggest holders of Greek government debt said on Monday they would take part. Twelve banks, insurers, asset managers and hedge funds in the steering committee of bank lobby group IIF, which helped negotiation the bond swap deal, said in a statement they would take part in the exchange.
They include BNP Paribas (BNPP.PA), Deutsche Bank (DBKGn.DE), National Bank of Greece (NBGr.AT), Allianz (ALVG.DE) and Greylock Capital Management.
(source: Reuters)

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