Greece’s government formally asked investors to exchange their holdings of government debt for new securities in the biggest sovereign restructuring in history.
“The Ministerial Council of the Hellenic Republic today approved the terms of invitations to be made to private sector holders,” the Greek Ministry of Finance said in a statement on Friday on a Web site set up for the exchange.
The bonds subject to the invitation had a total face value of about 206 billion euros (US$277 billion).
The government seeks a 90 percent participation rate and set a 75 percent rate as a threshold for proceeding with the transaction, according to the statement.
Parliament approved laws on Thursday to permit the exchange and cut 106 billion euros of the country’s debt. Private creditors gave their backing earlier this week as eurozone finance ministers weighed a 130 billion-euro package for the nation, its second rescue.
Institute of International Finance managing director Charles Dallara, who represented private bondholders in debt-writedown talks with the government, said he expected a majority of investors to agree to a voluntary bond swap.
“I’m quite optimistic,” Dallara told reporters in Mexico City ahead of a meeting yesterday of finance officials from the G20 nations.
He said that he expected “a high take-up” among bondholders.
The swap is required to secure the European bailout and is geared toward averting the collapse of the Greek economy and default by a member of the euro. The exchange must be completed before March 20, when the country has to redeem 14.5 billion euros of bonds. In return, Greece has promised 3.2 billion euros of public-spending cuts.
The nation’s debt was forecast to balloon to almost double the size of its shrinking economy this year without the write-off, the European Commission said in November.
There’s a “titanic” effort under way to push through plans to reduce wages for civil servants and cut spending on defense, education and healthcare, Greek Prime Minister Lucas Papademos said on Friday at a Cabinet meeting in Athens.
Investors will forgive 53.5 percent of their principal and exchange the remaining holdings for Greek government bonds and notes from the European Financial Stability Facility (EFSF). The coupon on the new bonds was set at 2 percent until February 2015, 3 percent for the following five years, 3.65 percent for 2021 and 4.3 percent until 2042.
Bondholders will exchange 31.5 percent of their principal into 20 new Greek government bonds with maturities of 11 to 30 years and the remaining 15 percent into short-dated securities issued by the EFSF. The new securities will be governed by British law.
Fitch Ratings on Wednesday cut Greece’s credit grade two levels after the country got approval to proceed with the exchange, reducing the long-term foreign and local currency issuer default ratings to “C” from “CCC.”
“The proposal to reduce Greece’s public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default,” Fitch said in a statement. “The exchange, if completed, would constitute a distressed debt exchange.”
Fitch said the country would get a “restricted default” rating after the swap starts, one level above “default.”
Once the transaction is completed, it will be moved out of that category and “re-rated at a level consistent with the agency’s assessment of its post-default structure and credit profile,” Fitch said.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS