FRANKFURT (MNI) – Sovereign issuers should treat fairly and provide
comparable treatment to all creditors in a case of debt restructuring so
as to avoid discrimination against any individual or groups of
creditors, the International Institute of Finance said Wednesday.

“No creditor or creditor group should be excluded ex ante from
participating in debt restructuring. Any exceptions to this principle
should be discussed and agreed to among all creditors on the basis of
adequate justification,” the IFF, that helped negotiate the private
sector involvement for a Greece’s rescue, said.

The IIF had previously criticized the European Central Bank’s
decision to claim seniority to other holders of Greek government bonds.
At the time, the ECB in a last minute operation had swapped its Greek
bond holdings accumulated under the bond buy program SMP for new ones
that were immune to collective actions clauses.

The ECB has since said that for any bonds bought under its new bond
buy program OMT will accept “the same (pari passu) treatment as private
or other creditors.”

“Retroactive legal changes to unilaterally modify the terms and
conditions of financial contracts may undermine the integrity of
financial markets and the sanctity of contracts and should be avoided,”
the IIF warned.

Frankfurt bureau tel.: +49-69-720142. Email:

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