The Greek Parliament's approval Thursday of the country's debt-restructuring plan—and of tough measures aimed at forcing it on creditors—has narrowed the options for most of the investors holding on to the country's beleaguered bonds.
The restructuring is designed as an exchange of existing bonds for new ones with less than half the face value. The swap is expected to be proposed formally Friday and run until March 9, according to a Greek official, giving creditors two weeks to contemplate their moves.
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Greek Finance Minister Evangelos Venizelos says Greece is ready to force the debt exchange through new collective-action clauses backed by European authorities.
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The Greek Parliament's approval Thursday of the country's debt-restructuring plan—and of tough measures aimed at forcing it on creditors—has narrowed the options for most of the investors holding on to the country's beleaguered bonds.
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What they will do depends on who they are and what sort of debt they are holding. How it plays out will determine whether Greece actually has to use the new powers it has just given itself to force creditors into line. Many lawyers and analysts say it is likely, but not assured, that Greece in the end will have to use those powers.
Of Greece's roughly ?350 billion in debt ($463.7 billion), some ?206 billion in bonds are eligible for the restructuring. The balance of the debt comprises in large part rescue loans from the euro zone and the International Monetary Fund, treasury bills and the holdings of the European Central Bank, which are exempted.
According to a Credit Suisse compilation, all but about ?18 billion of the ?206 billion in bonds were issued under Greek law. Under Thursday's law, Greece can make changes to all of those bonds with the approval of creditors holding two-thirds of the whole lot, or around ?125 billion.
Those lucky few holding bonds issued under foreign law, typically English, are in better shape. The English law bonds include provisions requiring two-thirds or three-quarters of each bond's creditors to approve changes to their terms, meaning a creditor with a large enough minority stake in a bond could hold out effectively.
It may be happening already: A Greek note maturing in May, issued under English law, is priced at about 70 cents on the euro, according to Reuters data, more than twice the price of other debt with similar maturity. There is just ?450 million of that note outstanding.
The Greek law creditors have the least wiggle room. "Objecting bondholders might not have too many good options," said Steven T. Kargman of Kargman Associates, which advises on debt restructurings.
Many of them are likely to just go along. Banks with Greek debt positions have been steadily increasing their provisions for losses over recent quarters, suggesting they are expecting simply to take the deal and move on.
For distressed-debt funds and other more aggressive creditors, possible long-shot, last-ditch efforts include seeking relief at the European Court of Human Rights, a Greek court or even a court in a foreign jurisdiction.
The likelihood of success is low, but some of these investors "will do whatever it takes to derail the process," said Rodrigo Olivares-Caminal, a senior lecturer in financial law at the University of London. Greece is trying to complete the restructuring in lightening fashion—before a bond repayment falls due March 20.
Delay works to the advantage of holders of that bond especially.
To give Greece enough debt relief, the European authorities funding the bailout are assuming the lion's share of bondholders will participate in the exchange one way or the other. An analysis prepared earlier this month for finance ministers presumed 95%. The toughest question is what happens if substantially fewer than that proportion sign up of their own volition.
Thursday's law gives Greece the power to effectively compel all bondholders to exchange as long as two thirds of them approve. That threshold is likely to be met by large banks and by Greek institutions.
Greek Finance Minister Evangelos Venizelos said Greece was ready to force the exchange through the new collective-action clauses. The European authorities "have approved the collective-action clauses and are pressuring us to approve and activate them," he said. But that would trigger credit-default swaps, a type of insurance. and, more importantly, reduce Greece's standing—and perhaps that of the rest of the euro zone—with financial markets even further.
"There's going to be some kind of repercussion," said Pawan Malik of Navigant Capital in London. European leaders are "being very naive in their thinking that they can do this without any consequences."
— Stelios Bouras and Nektaria Stamouli contributed to this article.
Write to Charles Forelle at charles.forelle@wsj.com