CAC clause on the way ?

Officials deny plan to enforce investor losses

13 Jan 2012

(File photo) Officials denied on Friday any immediate plan to submit to parliament a bill that could force reluctant creditors to sign up to a bond swap, after daily Ta Nea said the government would do so by Monday.   "Talk about imminent legislation on CACs (collective action clauses) is totally unfounded," one of the officials told Reuters on condition of anonymity. The official did not say if Athens may do so at a later stage.   Three senior euro zone sources told Reuters on Thursday that Athens was mulling such a bill, which would make a debt restructuring binding for all investors once a certain percentage agreed.   Greece needs a strong takeup in the bond swap to slash its debt to more sustainable levels and convince the EU and IMF to keep lending it the cash it needs to avoid a disorderly default.   But, without using collective action clauses, the participation rate could be smaller than needed because many hedge funds would profit more if the country defaulted because they would get paid in full from insurance.   Centre-left daily Ta Nea wrote that "the Finance Ministry will submit to parliament today or on Monday at the latest the bill that would oblige the registered minority of Greece's lenders to accept the terms agreed to by the majority of the lenders."   Charles Dallara, the head of bank lobby IIF which negotiates in the name of private bondholders, is expected in Athens on Friday for talks on the debt swap plan. (Reuters)