Greek bondholders may get deal linked to future GDP

Bondholders in debt swap talks with Greece may get offered a sweetener in the form of a coupon linked to the future GDP growth of the country.

As talks between creditors and the country continue, Bloomberg is reporting a new ‘gross domestic product warrant,' tied to the deal may be offered to ease the impact of accepting a lower interest rate on new bonds.

Talks have reached an impasse as creditors are reluctant to take such punitive terms on any new bonds issued as part of a debt swap deal.

The current proposals mean investors are looking at an estimated loss of 70% in total, but a GDP warrant would trim the loss by an estimated 0.5-3%

Greece and private creditors are near to signing a tentative deal that would include the warrants, according to reports. As an additional inducement for creditors, the debt would probably be governed under UK rather than Greek law, providing more bondholder protection.

Greece is seeking to get a deal squared away before next month when a tranche of its debt matures.