February 18, 2012
The European Central Bank is negotiating with Greece on behalf of its member central banks to exempt the Greek bonds in their investment portfolios from a debt restructuring, two euro-area officials said.
The ECB wants to swap the investment portfolio bonds for debt that’s exempt from collective action clauses, or CACs, to avoid losses in a private-sector debt restructuring, the officials said late yesterday. The central bank has already swapped Greek bonds it bought as part of its asset-purchase program for such securities, a third official with knowledge of the situation said.
Greece wants the bonds in the central banks’ portfolios to be included in a private-sector deal aimed at slicing 100 billion euros ($132 billion) off its debt, the officials said. The central banks are arguing they would have dumped the bonds if they were normal investors and that they shouldn’t be forced to take losses on them, the officials said.
An ECB spokesman declined to comment. Greek government spokesman Pantelis Kapsis wasn’t immediately available to comment.
The tussle comes as euro-area finance ministers gather in Brussels on Feb. 20 to decide on a second bailout for the embattled nation and sanction the private-sector bond swap.
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