Bloomberg News

JPMorgan Says 40% of Greek International-Law Bonds to Evade Swap

February 27, 2012

Feb. 27 (Bloomberg) -- Greek bond investors may prevent as much as 40 percent of the nation’s international-law debt from incurring losses in the nation’s bond-exchange plan, JPMorgan Chase & Co. said.

Collective action clauses, which are already embedded in the 18 billion euros ($24 billion) of outstanding securities and can enforce losses on holders, “are unlikely to be 100 percent activated,” Nikolaos Panigirtzoglou, European head of global asset allocation, wrote in a research note on Feb. 24. “The CACs require 75 percent majority and the issues are small, making it easy for an investor to hold a 25 percent share, which is enough to block the CAC activation.”

JPMorgan assumes 60 percent of the international-law bonds may take part in the nation’s plan to lower its outstanding debt, providing 6 billion euros of “debt relief” from the securities, while 7 billion euros are repaid at par, Panigirtzoglou wrote.

“The pricing of international-law bonds varies from 8 cents to 80 cents,” with the average at 33 cents, he said. “This low price might reflect the lack of knowledge of who exactly holds these 30 international-law bonds and which of them will have their CACs activated.”

Unlike the securities governed by international law, Greece’s domestic-law debt didn’t originally have collective action clauses when they were issued.

To contact the reporter on this story: Paul Dobson in London at

To contact the editor responsible for this story: Daniel Tilles at

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