Athens wins 96% support for debt restructuring

The holders of 95.7% of Greek soveregn debt have agreed to swap their holdings for new paper with a lower coupon and changed maturity. The take-up rate should allow Athens to compel remaining creditors to accept the deal, too, in history’s biggest sovereign restructuring.

Bondholders yesterday tendered €152bn of bonds governed by Greek law, plus €20bn of foreign-law bonds to the swap process.

Athens had aimed for at least 90% participation in the deal, which will see its private creditors lose 68.5% of the net present value of their original holdings.
The new paper will be governed by English law.

The euro softened slightly in early trading today, while Germany’s and France’s leading benchmarks each jumped by about 2.5%.

Asian stocks strengthened overnight, too.

Finance Minister Evangelos Venizelos issued a statement expressing thanks 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 endeavor”.

He will speak to the press this afternoon after his nation effectively cut its €206bn of obligations to private bond holders by 53.5%.

Athens should now receive the €130bn bail-out cash from the troika of International Monetary Fund, European Central Bank and European Commission.

The International Swaps and Derivatives Association will meet this afternoon to rule on whether a ‘credit event’ has occurred as a result of the deal, though it previously indicated sellers of insurance implicit in credit default swaps would only have residual net exposure of €3.7bn to Greek debt holders.

BNP Paribas SA and Commerzbank AG, and Allianz were among investors that said before the deal, that they would participate.

Announcing Allianz’s participation ahead of the 2200 CET deadline, Michael Diekmann said the swap was “an important step towards a solution for the economic problems of Greece.”

Allianz, which was a member of the steering committee of private investor investment committee for Greece, had a nominal value exposure of €1.3bn at the end of 2011, but had already written down the value of exposure to 24.7%, leaving it with just €310m exposure.

Diekmann said Allianz, and its clients, would benefit from the greater stabilisation of the Eurozone economy.

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