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Some hedge funds seem determined to force Greece to fully pay all of their Greek bond holdings, which will lead to souring of relations between Greek authorities and the market speculators.

The "weapon" in the hands of hedge funds is a loophole in the law that gives them reason to claim that Greece has already announced the suspension of payments.

According to the "Reuters" agency, which quotes well-informed sources, specific bonds issued by the Greek State Railways, with the state’s guarantee, contain a clause allowing their holders to argue that Greece is bankrupt if they try to change the terms. And now speculators claim that when Athens uses PSI, it wants bondholders to replace bonds with ones of much lower value, and this way it actually announces suspension of debt payments.

Now funds are trying to buy as many of the Greek Railways bonds as they can in order to oblige Greece to pay their full value, which is around 400 million Euros. If the state refuses to do so, this may cause a domino effect to similar clauses in other bonds of the railways and the country will be faced with "a bill" amounting to 3 billion Euros that creditors will require to be paid immediately.

According to "Reuters" Greece has warned that the country does not have the money to pay the bondholders, but sources close to those involved in the PSI negotiations are now worried that some smaller bonds will have to be paid fully in order to solve this problem. There are fears that hedge funds will start the respective procedures very soon.

Meanwhile, despite the successful outcome of the PSI, the prices of new bonds on the over the counter market show that a strong concern remains about the future of Greece, as many believe that the country will have to restructure its state debt even further.

At least three foreign banks have already made deals with the new bonds and the prices they offer for them vary between 20 and 25 percent of their nominal value, a fact which, according to financial analysts, reflects the belief that the Greek debt remains not viable.

Meanwhile, based on the new bonds marketing on the over the counter market, financial analysts estimate that losses for bondholders in the net present value (NPV) will reach 78 percent, not nearly the 75 percent agreed between the Greek authorities and private creditors. In any case, it should be noted that these figures take no account of the so-called "GDP clause" which will be activated in case of higher growth of Greece by the economic policy programme.

Markets seem aloof

The markets greeted with mixed feelings the results from the Greek PSI. On the one hand they felt relief because of the high percentage of voluntary participation, and on the other, concerns grew about the decision for triggering the collective action clauses. And generally skepticism remains about the future of Greece.

Analysts and creditors commented that the "haircut" of the debt does not solve the deep structural problems of the Greek economy, nor does it ensure the success of the second economic support programme. Many of them foresaw the need for further debt restructuring.

As investors rethought the new realities on the stock markets the indexes provided restrained profits. The European FTSEurofirst 300 index rose 0.5 percent and Wall Street indexes showed modest increases, a fact, which, however, is due more to the positive data on U.S. employment.

The successful outcome of the PSI gave some fresh air to Italian and Spanish government bonds, which initially marked an upward movement. The grim predictions regarding the Eurozone growth and fears that Portugal may also have to cut its bonds held by private creditors turned the positive climate around at the end of the session.

Meanwhile, the new Greek bonds maturing in 2023, which will be provided to private creditors under the programme for exchange on the over the counter market reached a yield of more than 15 percent - a level higher than the corresponding yield on Portuguese bonds - a fact which reveals the still existing threat of suspension of payments.

"Banana Republic"

For its part, the German Association of small investors - SdK, is exploring the possibility of taking legal actions against Greece for its decision to trigger the collective action clauses.

"The plan of the Greek government to require holders of Greek bonds to participate in PSI, violates fundamental principles of law", said SdK President Daniel Bauer, characterizing it as a "disastrous sign for all investors, which will make Europe a "Banana Republic".