Investors Remain Divided Over Greek Foreign-Law Bond Losses

A minority of private holders of Greek government debt remain sharply divided on whether those opposed to a bond swap costing them three-quarters of their investment should be obliged to take part in the deal, government figures showed on Monday.

What happens to those who do not participate may set an important precedent in Western Europe's first sovereign debt restructuring in decades.

The swap has been hailed as a success by Athens, allowing it to procure bailout funds from European partners and the International Monetary Fund to avert bankruptcy.

Athens completed the bulk of its bond exchange on March 12, swapping a nominal amount of 177 billion euros ($235 billion) of government paper issued under Greek law for new securities, inflicting real losses of about 74 percent on private-sector bondholders.

However, the exchange of bonds issued under foreign law has yet to be settled, and special meetings have tried to get more of the holdouts on board. Investors holding about 8.3 billion euros in face value have been resisting the swap.

Thirty-six bondholder meetings took place on March 27-29, the finance ministry said, to decide whether so-called "collective action clauses" (CACs) should be activated, allowing a majority of investors to enforce the losses on minority shareholders.

Sixteen of those meetings gave the go-ahead to impose the CACs. Eleven meetings rejected them, seven meetings were adjourned and two failed to reach a quorum.

Greece has given remaining holdouts on its foreign-law and other government-guaranteed debt until April 4 to take part in the swap, extending a previous deadline.

The participation rate in the bond swap is already 95.7 percent, and Greece will have three options on what to do the small minority who hold out. It can continue to service the bonds, default and trigger litigation or come up with another offer.

Known as private sector involvement (PSI), the swap includes a pool of foreign-law Greek government bonds and bonds issued by state firms totalling a nominal value of 28.3 billion euros. Of this pool, 20 billion had already accepted the swap.

"The Republic accepted the amendment of all series where the resolutions were approved by the requisite majority and re-opened the consent solicitation for all series where meetings have been adjourned to April 18," the finance ministry said.

"Whatever the final outcome