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Greece To Decide On Debt Swap Holdouts Soon

ATHENS -- Greece will decide by the end of May in cooperation with its euro-zone partners on what to do with a small group of investors who refuse to voluntarily sign up to its mammoth debt restructuring, a senior government official said Friday.

Shortly after a cabinet meeting, the government official said a decision will be taken by the next government following May 6 national elections.

Earlier this week, Greece completed the debt restructuring demanded by its international creditors in exchange for its new EUR130 billion bailout.

But investors holding some EUR6 billion worth of Greek government bonds or bonds issued by Greek state-owned enterprises and guaranteed by the government, refused to participate in the debt writeoff. May 15, Greece faces a deadline on how to deal with those holdouts when the country must redeem a maturing EUR450 million foreign law bond. The official said there is a 15-day grace period on that redemption.

"It will be a Greek decision but made with the approval of the Eurogroup", the official said. "The next government will make the decision not the [current] government."

In the past few weeks, Greece has been talking tough, saying it won't give more favorable terms to investors that have snubbed the deal. But the prospect of forcing a restructuring on unwilling bond holders will raise questions about the precedent it sets for European government debt markets.

According to the finance ministry, some EUR199 billion worth of Greek government debt has now been restructured, representing 96.9% of the EUR205.5 billion worth of government debt held by private-sector creditors that was slated to be restructured.

Those resisting the debt exchange are apparently hoping to get a better deal than what is currently on offer. They are betting that Greece may look to avoid the long, drawn-out court battle that is likely to ensue, opting instead to just pay off remaining bondholders, possibly in full.

-By Alkman Granitsas and Stelios Bouras, Dow Jones Newswires; +30-210-3731772;

(END) Dow Jones Newswires

April 27, 2012 12:05 ET (16:05 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.



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