Bloomberg News

Greece Pays Coupons on Italian-Law International Bonds

March 13, 2012

Greece, which last week carried out the biggest sovereign debt restructuring, said it paid the interest due on one of its international bonds yesterday.

The nation has 183 million euros ($240 million) of 5 percent bonds due March 2019 outstanding, that were issued in 1999 and pay interest on March 11. The payment date for the 9.1 million euros of interest fell on a Sunday, so the coupons were paid “the next good business day,” Petros Christodoulou, director general of the Athens-based Greek Debt Management Office, said in an e-mailed statement.

Greece last week used collective action clauses to ensure holders of 197 billion euros, or 95.7 percent, of bonds in the exchange agreed to swap their securities for new notes. About 9 billion euros of bonds issued under laws other than Greek are still outstanding, the finance ministry in Athens said March 9.

“The point of all this was to avoid a disorderly default,” said Andreas Koutras, an analyst at ITC Markets in London. “The Greek law bonds were dealt with last week but the foreign bonds haven’t been exchanged yet, so the coupons still have to be paid.”

The notes were marketed to Italian savers and the banks that managed the sale included Banca Profilo SpA (PRO) in Milan and Banca di Roma SpA, now part of UniCredit SpA. (UCG) The final terms of the issue, available on Bloomberg, are in Italian and show that the notes are governed by Italian law.

Meetings for holders of foreign-law bonds will be held at the end of this month and the transactions are due to settle on April 11.

“Continuing servicing the Greek debt should be expected,” said Athanasios Vamvakidis, a strategist at Bank of America Merrill Lynch in London.

The new Greek government bonds maturing in 2023 declined today, pushing the yield up 70 basis points, or 0.7 percentage point, to 19.15 percent. The bid price on the securities dropped 1.335 to 26.5 percent of face value.

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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