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Greece Plans to Make PSI Binding With No Cash for Holdouts

March 6 (Bloomberg) -- Greece will use collective action clauses to bind holders of Greek-law bonds to accept a debt swap if it receives sufficient consents, according to an e-mailed statement from the Athens-based Finance Ministry today.

Petros Christodoulou, the director general of the Public Debt Management Agency, outlined the country’s ongoing debt swap at a meeting in Frankfurt yesterday, according to the e-mail. The nation’s “economic program” doesn’t include any provisions for investors unwilling to take part in the private-sector involvement of its debt-reduction plan, it said.

“The Republic confirmed that if it receives sufficient consents to the proposed amendments of the Greek-law governed bonds identified in the invitations for the amendments to become effective, it intends, in consultation with its official-sector creditors, to declare the proposed amendments effective and binding on all holders of these bonds,” the statement said.

“The Republic’s representative noted that Greece’s economic program does not contemplate the availability of funds to make payments to private-sector creditors that decline to participate in PSI,” according to the statement.

The price of the 4.3 percent notes maturing on March 20 rose from a record low today, climbing to 22 percent of face amount at 4:24 p.m. London time, from 20.5 yesterday.

Greece said that if the debt swap wasn’t successful, “the official sector will not finance Greece’s economic program and Greece will need to restructure its debt” on different terms to those set out in the current invitation.

The deadline for bondholders to accept the invitation is March 8, while those with foreign-law government bonds have until April 11, according to the statement.

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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