Bloomberg News

Greece’s Samurai Bond Holders in Japan May Be Exempted From Debt Swap

March 02, 2012

Greece negotiated the largest debt restructuring on record. Photographer: Simon Dawson/Bloomberg

Greece negotiated the largest debt restructuring on record. Photographer: Simon Dawson/Bloomberg

Holders of 108.7 billion yen ($1.33 billion) of Greece’s yen-denominated bonds who live in Japan may not be affected by an agreed debt swap as part of the biggest restructuring in history.

The swap agreed to on Feb. 24, known as private sector involvement, or PSI, doesn’t apply to the holders because of the time limits and Japanese legal requirements, Shinsei Bank Ltd. (8303), Mizuho Corporate Bank Ltd. and Aozora Bank Ltd. (8304), fiscal agents for the securities in Japan, said in statements today. Greece last week formally offered to exchange some bonds for new notes, with investors taking a 53.5 percent haircut.

“The announcement gives near-term comfort to Japanese investors, however it doesn’t promise a massive improvement on the situation,” said Akane Enatsu, a senior credit analyst at Barclays Capital Japan Ltd. in Tokyo. “Greece’s situation is still on a knife-edge, and it’s unsure whether it will be OK until the Samurai bonds reach redemption in 2015 and 2016.”

Greece is seeking to reduce national debt to 120 percent of gross domestic product by 2020, from 160 percent last year, to meet the terms of a 130 billion-euro ($173 billion) international bailout. Euro-area finance ministers authorized the rescue fund to issue bonds, while the International Swaps & Derivatives Association said $3.25 billion in Greek credit- default swaps won’t be triggered.

Bond Treatment

“The Greek government isn’t in a position to promise anything at this moment regarding the treatment of the aforementioned bonds owned by residents in Japan,” Shinsei Bank said in the statement. Greece will notify the result of the current PSI offer to the fiscal agents “without any delay.”

Toshiharu Mashita, a spokesman for Japan’s Financial Services Agency in Tokyo, said the agency is aware of the statements, while declining to comment further.

Japan’s Chief Cabinet Secretary Osamu Fujimura said at a briefing in Tokyo today that he hadn’t heard about the Greek Samurai bond report.

The five bonds affected were all sold in 1995 and 1996. They include the Greek government’s 40 billion yen of 5 percent notes maturing in August 2016, and its 30 billion yen of 5.25 percent February 2016 securities, which are both represented by Shinsei Bank.

Mizuho Corporate Bank is the agent for Greece’s 20 billion of 5.8 percent notes due in July 2015.

Aozora Bank managed the sale of 18.7 billion yen of securities for the Hellenic Railways Organization, Greece’s state-run rail company, including 7.35 percent notes due March 2015 and 4.5 percent notes due December 2016.

To contact the reporters on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net; Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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