Greek repayment of Samurai notes seen as sign of commitment to creditors

Outstanding amount on notes maturing on Tuesday was $95 million

Repayment of Samurai notes demonstrates commitment of Greek government to  creditors. Photograph: Reuters.

Repayment of Samurai notes demonstrates commitment of Greek government to creditors. Photograph: Reuters.

 

The Greek government repaid Samurai notes maturing on Tuesday, according to bond agent Mizuho Bank, in a first sign the nation is honouring its obligations after reaching a deal with creditors.

Masako Shiono, a spokeswoman for Mizuho, confirmed the repayment. The outstanding amount was 11.67 billion yen ($95 million).

The price of the securities fell to 44.73 yen against par on July 10th, compared with 80.35 yen on June 1st, the data show.

Greece chose to pay private investors while missing a further payment to the International Monetary Fund due on Monday, increasing arrears to the global lender of last resort to about €2 billion ($2.2 billion).

While the IMF will wait to get its money back, institutional investors wouldn’t, and a default on the Samurai bond would have complicated the repayment schedule, according to Daiwa Securities Group.

“One default would trigger a cross default,” said Hiroaki Fujioka, a senior credit analyst in Tokyo at Daiwa, Japan’s second-largest brokerage.

“Everybody would ask for their debt to be repaid, in an accelerated process.”

The latest Greek crisis hasn’t deterred Japanese fixed income investors from buying the bonds of European issuers in recent weeks.

A unit of Credit Suisse Group sold 110 billion yen of Samurai notes on July 10th, while France’s Caisse des Depots et Consignations began marketing yen debt for sale this week.

- Bloomberg