Bloomberg News

Greece’s Debt Swap Endorsed by IIF as Investors Left to Decide

March 04, 2012

The Institute of International Finance, which represented private creditors in the negotiations over Greece’s debt swap, endorsed the final terms of the deal and left its members to choose whether to take part.

“The decision to participate in the debt exchange lies exclusively with individual investors,” the IIF said in a statement issued by e-mail today after a board meeting yesterday in Zurich, Switzerland. The Washington-based group represents more than 450 financial services companies around the world.

Private creditors reached an agreement with Greek and European officials last week on the biggest sovereign debt restructuring in history. The plan seeks to reduce Greece’s borrowings by about 106 billion euros ($140 billion) and lower debt to 120.5 percent of gross domestic product by 2020.

Under the deal, investors will forgive 53.5 percent of their principal and exchange their remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility. Euro-area finance ministers last week authorized the EFSF to issue bonds for the swap.

The success of the deal depends on how many investors participate in the transaction. The swap “will contribute meaningfully” to Greece’s efforts to restructure its economy and secure a new rescue package from the European Union and International Monetary Fund, the IIF said.

“These are important steps towards resolving the Greek debt crisis, addressing the overall fiscal and sovereign debt problems in the euro area, and restoring financial stability, which is essential to foster economic growth and job creation,” the IIF said in its statement.

New Panels

The trade group also announced the leaders of two panels that will focus on particular financial services.

Walter Kielholz, chairman of Swiss Re, was named head of a new asset management and investment council that will focus on long-term investment issues. The panel’s members will be chief executive officers and chairmen from asset managers, life insurers, pension funds and sovereign wealth funds.

The group will “bring forward to the public policy debate the unintended consequences that could result from uncoordinated or poorly thought-through regulatory changes that might prompt traditional long-term investors to take a shorter-term view,” said Charles Dallara, the IIF’s managing director.

The IIF also named Martin Senn, CEO of Zurich Financial Services Group, as chairman of the group’s insurance regulatory committee. Senn said the panel, composed of senior insurance executives, will champion the insurance business and “strengthen the IIF’s work in its dialogue with the official regulatory authorities,” according to the statement.

To contact the reporter on this story: Rebecca Christie in Brussels at Rchristie4@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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