Greece gets shareholder backing for crucial debt deal

Greece has confirmed it received enough support from creditors to carry out a vital debt swap which drastically cuts the value of debt owned by bondholders.

In a deal which will help it secure the latest round of financial aid from the IMF and the EU, Greece’s Ministry of Finance said holders of 85.8% of debt subject to Greek law and 69% of its international debtholders agreed the deal.

The take-up is high enough for the government to force unwilling investors to consent to the deal, with Athens needing 75% of holders to approve it.

The deal will see holders of debt worth €172bn ($227bn, £143.7bn) taking a total loss of up to 74%.

However, only 69% of the minority of bondholders not governed by Greek law agreed the deal – and Greece was forced to extend the deadline for these foreign bondholders to sign up until 23 March.

Investors are now waiting to see if forcing bondholders to take the deal – or enforcing so-called Collective Action Clauses – will be deemed as a default.

“On behalf of the republic, I wish to express my appreciation to all of our creditors who have supported our ambitious programme of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour,” Finance Minister Evangelos Venizelos said, according to the BBC.

“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 Greek Finance Ministry had made it clear that the alternative to the debt swap is a potential default.


This article was first published on Investment Week

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