The Greek government was unfazed by a proposal submitted last week by British judge Robin Knowles in a London court case concerning Greece’s GDP-linked warrants — bonds issued as part of the country’s 2012 debt restructuring. The judge suggested that the lawyers representing Greece could also act for both parties in the proceedings between the Hellenic Republic and a group of foreign investors.
According to officials familiar with the matter, Greece’s legal adviser, Cleary Gottlieb Steen & Hamilton, had already warned the government that such a proposal might arise, particularly after Athens decided to stop funding Wilmington Trust, the company serving as trustee for the instruments. The judge’s suggestion followed the withdrawal of lawyers representing both the investors and the trustee, after neither side agreed to bear the legal costs.
The case revolves around GDP-linked warrants issued under the 2012 Private Sector Involvement (PSI) deal, with maturity extending to 2042. On April 4, 2025, Greece announced its intention to buy back all outstanding warrants at a price of €252.28 per 1,000 units, with settlement scheduled for May 14, 2025. That decision sparked objections from several investors, who questioned both the legality of the move and the method used to calculate the buyback price.
Athens maintains that it acted fully within the terms of the instruments and that the repurchase price was correctly determined. To affirm this position, the Public Debt Management Agency (PDMA) has asked the English court to confirm the legality of the decision and the pricing calculation. Because Greece initiated the proceedings, Judge Knowles proposed that the Greek state also cover the investors’ legal expenses to ensure the process can move forward without delay — a scenario considered likely given that the government is the moving party.
The dispute has also drawn attention from the International Monetary Fund (IMF), which discussed the case extensively in its recent report, “A Stocktaking of the Current International Architecture for Resolving Sovereign Debt Involving Private Sector Creditors.” The IMF noted that Greece had sought to repurchase all GDP-linked securities by triggering a clause embedded in their issuance terms. However, the process became contentious when a group of creditors challenged both Greece’s unilateral right to activate the clause and the calculation of the proposed repurchase price.
Athens justified the buyback as a means to simplify the structure of public debt and reduce servicing costs. The IMF, while acknowledging the rationale, cautioned that such transactions must be handled carefully, as debt instruments linked to economic performance carry substantial legal and technical risks. It warned that unresolved disputes over pricing could lead to prolonged negotiations, similar to cases seen in other countries that have issued state-contingent debt instruments tied to economic variables.
