The investors holding Greek bonds with clause GDP (Warrants) have formed a team to represent their interests, after the government announced earlier this month that it is planning to repurchase the titles.
Greece told its investors that it wanted to repurchase all the outstanding Warrants connected to GDP and expire in 2042 at a market price just over 25 minutes of the euro. In a note on May 7, she also said that she would request clarifications by an English court on legal validity and whether the purchase price was correctly calculated, reuters broadcast.
GDP -connected warrants are fixed income securities that usually pay as soon as economic growth exceeds a certain limit. They may show very little marketability and be difficult to value, Reuters notes. The AD-HOC group of creditors one is among the members of the big institutional holders.
As Reuters says, the team owns or controls over 40% of warrants. In a statement issued late on Thursday, he said he was set up to examine “some issues” related to repurchase. “The team has expressed concerns, especially about calculating the market price for securities,” he said.
Greece issued Warrants in 2012 as part of the huge debt reform of the country to investors who volunteered in an impairment of capital, known as haircut. Warrants will be activated when the country’s GDP – which is currently € 240 billion ($ 268 billion) – exceeds 267 billion euros and when economic growth exceeds 2%.
Both terms were expected to be fulfilled in 2027 and, according to data from the Greek Electronic Secondary HDAT securities and Reuters calculations, this would mean that the Greek government would have to pay around 320m euros that year. Meanwhile, the exercise of the market right would require the government to spend 155m euros on repurchase now.
The Greek government expects growth of 2.3% this year, twice the eurozone average, Reuters says. The creditors team has assigned White & Case LLP its legal advisory support.