Greece bond swap deal successful

Euro notes and coinsGreece has secured a high enough participation in its critical bond swap offer to drastically reduce its debt, staving off an imminent default and paving the way for the release of funds from international rescue loans.

Greece said that 85.8 % of private investors holding its Greek-law bonds had signed up to the deal, and that it aimed to use legislation forcing holdouts to participate.
It extended the deadline for holders of foreign-law bonds, of whom 69% have so far signed up, until March 23.

The deal aims to slash the country's national debt by 107 billion euro, with private bond holders accepting a face-value loss of 53.5%, in exchange for new bonds with more favourable repayment terms. If the swap had failed, Greece would have faced defaulting on its debts in two weeks, when it faced a large bond redemption.

Finance ministers from the 16 other countries that use the euro are to discuss the deal's results in a conference call later.

The International Swaps and Derivatives Association said it would also meet to determine whether the deal would be deemed a so-called "credit event" - a technical default - which would trigger the payment of credit default swaps, which is essentially insurance against a default.

The bond swap is a radical attempt to pull Greece out of its debt spiral and put its shrinking economy back on the path to recovery. The hope is that by slashing the overall debt, the country, which is in a fifth year of recession, can gradually return to growth and eventually repay the remaining money it owes.

"I wish to express my appreciation to all of our creditors who have supported our ambitious program of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour," finance minister Evangelos Venizelos said.

"With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth."

The deal was an essential part of Greece's second international bailout, and the country now hopes to start receiving funds from the multi-billion pound package of rescue loans from other eurozone countries and the International Monetary Fund.
Read Full Story

FROM OUR PARTNERS