Bloomberg News

Greek Debt Holders Said to Meet at Deutsche Bank Tomorrow

November 17, 2011

(Updates with IIF comment in sixth paragraph, decline in debt holdings in ninth.)

Nov. 16 (Bloomberg) -- Bond holders are scheduled to meet at Deutsche Bank AG’s headquarters in Frankfurt tomorrow to discuss details of the Oct. 26 debt-swap agreement that is aimed at reducing Greece’s obligations, according to two people familiar with the matter.

The Institute of International Finance, which represents more than 450 financial firms, has invited investors to discuss a proposal being presented to Greece, said the people who declined to be identified because the talks are private. Bond holders may also meet Greek government officials at a separate gathering in the German banking capital tomorrow, one of the people said.

The IIF, which is chaired by Deutsche Bank Chief Executive Officer Josef Ackermann, agreed last month in Brussels with European leaders to accept a 50 percent writedown in the face value of Greek sovereign holdings to help the country recover. Debt holders and Greek government representatives are negotiating the terms of the swap as contagion spreads to the larger European economies of Italy and Spain.

Tomorrow’s talks will focus on interest payments, debt maturities, and links to Greece’s economic growth and how these affect the value of bond holdings, one of the people said. Investors are waiting for a counter-proposal from the Greek government, the person said.

Deutsche Bank spokesman Ronald Weichert declined to comment on the meeting.

Dallara in Athens

IIF Managing Director Charles Dallara, who has been leading negotiations with Greece and European leaders, will be in Frankfurt for two days this week, talking with representatives of bond holders, the organization confirmed by e-mail today. Dallara is scheduled to meet Greek Prime Minister Lucas Papademos at 8 p.m. in Athens today, the premier’s office said in a separate statement.

Dallara is also scheduled to speak at the European Banking Congress in Frankfurt on Nov. 18, where Ackermann, Commerzbank CEO Martin Blessing and Deutsche Bundesbank President Jens Weidmann will also be speaking, according to the schedule.

The Financial Times reported earlier today that bond holders are demanding incentives, including annual payments if Greece’s economy recovers and high interest rates on new debt. Investors will meet Greek government officials in Frankfurt tomorrow, the FT said.

Banks Selling

“Core” European banks, excluding lenders in peripheral member-states, reduced their holdings of Greek, Irish, Italian, Portuguese and Spanish government debt by 42 billion euros ($57 billion), or about one-third, in the third quarter to 88 billion euros, according to analysts at Goldman Sachs Group Inc. The biggest reduction was 26 billion euros in Italian bonds.

The Greek private investor contribution in the Oct. 26 rescue package “sets a risky precedent, in our view, as the prospect of ‘voluntary’ haircuts becoming a template for GIIPS crisis resolution could drive exposure reduction,” Goldman analysts led by Jernej Omahen said in a Nov. 15 research note.

BNP Paribas SA and Commerzbank AG are unloading sovereign bonds at a loss, leading European lenders in a government-debt flight that threatens to exacerbate the crisis. BNP Paribas, France’s biggest bank, booked a loss of 812 million euros in the past four months from reducing its holdings of European sovereign debt, while Commerzbank took losses as it cut its government bond-holdings.

--With assistance from James Amott in London and Marcus Bensasson in Athens. Editors: Angela Cullen, Dylan Griffiths

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net


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