Evangelos Venizelos gave a stark warning to any hold-outs that Greece cannot pay its debts and is fully prepared to activate retrospective clauses in its bonds that could impose the deal on uncooperative creditors. “Whoever thinks that they will hold out and be paid in full is mistaken,” he said.
Greece needs over two thirds of its private creditors to agree to swap their current bond holdings for a mix of longer-dated bonds and debt issued by the Eurozone bailout fund. If two thirds agree, the deal can be forced upon the rest. If three quarters sign up, it will be deemed a “voluntary” debt swap.
The 12 who agreed to take part yesterday include eight banks – three of them Greek – three insurers and one asset manager. They make up around a quarter of the bodies Athens needs to get on board.
If the deal falls through, Greece will default and could be forced out of the euro, a scenario that its creditors have estimated could cost €1 trillion in total to private investors and public European bodies.