A steering committee representing global banks and insurers is close to hiring Blackstone Group LP (BX) and two law firms to advise it on debt-swap talks with Greece, according to two people familiar with the matter.
A formal engagement with Blackstone, White & Case LLP and Allen & Overy LLP may be completed as early as this week, said one of the people, who declined to be identified because the talks are private. The steering committee was formed last month by a private creditor-investor group and is conducting negotiations on the voluntary debt swap with Greek and European authorities.
Creditors are working with the advisers to limit their losses in a debt restructuring after already agreeing to accept a 50 percent writedown on the face value of their Greek sovereign holdings. The steering committee, which includes representatives from Axa SA (CS), Commerzbank AG, ING Groep NV and National Bank of Greece SA, is seeking to reach an agreement on the details of a swap in early January, one person said.
“It presumably suggests that they are not accepting a fait accompli,” said Tim Dawson, a Geneva-based banking analyst at Helvea. “You wouldn’t hire these guys if you weren’t trying to reduce your losses.”
The steering committee is co-chaired by Charles Dallara, managing director of the Institute of International Finance industry group, and Jean Lemierre, a senior adviser to the chairman at BNP Paribas (BNP) SA, according to a Nov. 28 statement from the IIF.
Frank Vogl, an IIF spokesman, declined to comment.
The IIF, representing more than 450 financial firms, agreed in October in Brussels with European leaders to accept the writedown on their Greek holdings to help the country recover. The swap deal, part of a 130 billion-euro ($170 billion) second bailout agreement for Greece, is supposed to help the nation reduce its debt to 120 percent of gross domestic product by 2020.
The steering committee aims for “significantly more progress” in talks on a Greek debt swap scheduled for this week in Paris, the IIF said in a separate e-mailed statement yesterday. The group met with Greek, European and International Monetary Fund officials in Athens on Dec. 12 and Dec. 13, it said.
Greece made new proposals on the structure of a debt swap agreement with private creditors, while disagreement remains on key issues, a person on the lenders’ negotiating committee said this week. Under one plan, Greece would give 15 cents in cash and 35 cents in new bonds for every euro of existing debt that will be swapped, said the person.
Talks are progressing, and the creditors and government authorities are seeking to find non-cash ways to enhance the value of the new Greek debt, another person said. The negotiations will address terms such as the collateral accompanying the new bonds.
“Most banks, insurance companies and hedge funds will behave in a sensible way because if private-sector involvement is not successful, their other assets will be at risk,” Manos said. “I believe we will come close to the haircut target.”
In July, Greece said it hired three banks -- BNP Paribas, Deutsche Bank AG (DBK) and HSBC Holdings Plc -- to oversee its voluntary bond exchange and debt buyback plan. The government also retained Cleary Gottlieb Steen & Hamilton LLP as its international legal adviser and Lazard Ltd. as a financial adviser, according to a statement at the time.
European stocks rose after falling the most in three weeks yesterday and Spanish bonds advanced as the nation raised almost double its target at a debt sale. The euro was little changed at $1.3003 after falling to $1.2946 yesterday, its lowest level since Jan. 11.
To contact the reporters on this story: Jonathan Keehner in New York at firstname.lastname@example.org; Rebecca Christie in Brussels at email@example.com; Aaron Kirchfeld in Frankfurt at firstname.lastname@example.org.