The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Marc Chandler
NEW YORK (BBH FX Strategy) -- Following the Greek PSI in March, one would have thought Greece would be out of the news until next month's election. However, the risk of another near-term default has increased, putting the nation back in the spotlight.
Investors who hold Greek bonds that are governed by foreign (non-Greek) laws are balking at "voluntary" debt forgiveness.
The bonds governed by foreign law have to be voted on by each individual, and the investors appear to have blocked restructuring in 20 of the 36 cases.
Altogether, there is about $26.8 billion at stake. Of this amount, $15.3 billion appears to have been resolved through debt forgiveness.
That leaves about $11.5 billion as a sticking point. One of those outstanding is a 450 million euro FRN that is due May 15. There is a 30-day grace period for making the payment, according to press reports.
There is some fear that Greece could default on this debt, sending it to a non-Greek court for resolution.
Theoretically, Greece could just pay the full amount, but it does not seem so inclined, which raises questions of equitable treatment of private investors.
Greece could refuse to pay anything, which it appears to have threatened to do, but this also raises questions of equitable treatment.
Greece also could negotiate with these creditors to find a middle ground, but this seems unlikely.
The holders of Greek bonds that are governed under non-Greek law have until April 4 to declare their intent.
Turning to politics, amendments to key spending legislation are expected to be submitted over the next couple of weeks. There is a loophole in the procedural rules that allows amendments to be adopted even if there was no prior cabinet approval.
This injects a greater element of uncertainty, especially ahead of the May 6 election. The latest polls shows the Socialists gaining 4.5 percentage points to 15.5% and New Democracy slipping 2.5 points to 22.5%.
There has been some thought that the current coalition government could be maintained and that technocrat Prime Minister Lucas Papademos would actually stay on, but as vice prime minister, with Antonis Samaras becoming prime minister.
Although this may be the best scenario for investors, the risk is that the public, which is facing even more austerity measures, protests by withdrawing support from the major two parties. A fragmented parliament still seems like the most likely outcome at this juncture.
The new Greek 10-year bond yield rose Monday to 20.55%. It is the fifth consecutive session that yields have risen, and they are at new highs since the new bonds were issued in early March.
In the past five sessions, the yield has risen 50 basis points. The German 10-year yields have fallen 16 basis points. The spread stands at 1,824 basis points, widening by 66 basis points, or 3%, over this period.