Papademos Says CACs Activated If Required

Prime Minister Lucas Papademos met again on Thursday with Institute for International Finance (IIF) managing director Charles Dallara to resume the negotiation on the Greek bond swaps, the state news agency said. The two officials, with Finance Minister Evangelos Venizelos also in attendance, resumed their discussions  following a suspension of the negotiations last Friday.  No statements or comments were made after the meeting. However, it was agreed that the discussion will continue.

In an interview published in the New York Times on Wednesday, the Greek prime minister noted that “the private lenders must acknowledge that they could take a loss from the PSI procedure”, adding that in the event that the bondholders do not agree then it is possible that the CACs (Collective Action Clauses in sovereign bonds) will be activated”.

According to the New York Times, Papademos said that if Greece did not receive 100 percent participation in a program in which bondholders would voluntarily write down 50 percent of debt, the country would consider passing a law to require holdouts to take losses. “It is something that has to be considered in the light of expectations about the degree of the participation to be achieved,” Papademos, cited by the newspaper, said, adding: “It cannot be excluded. It is contingent on the percentage.” (AMNA)


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