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发帖数: 6411 | 1 Nearly 95% of Greek Creditors Agree to Bond-Swap Deal
Published: Thursday, 8 Mar 2012 | 4:34 PM ET
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By: Reuters
Greece's race to slice 107 billion euro ($140 billion) off its debt entered
the home stretch Thursday, with participation in a bond swap deal nearly 95
percent, a Greek government official close to the process said on Thursday.
"About an hour before the deadline expired, the participation rate was
nearing 95 percent and responses were still coming in," a Greek government
official told Reuters.
That meant Greece had easily topped the 90 percent target for participation
it had set itself, in a major boost for the debt-stricken country.
The deadline for investors was 10 p.m. local time (3 p.m. New York Time) to
sign up to the deal which aims to lower Greece's national debt by having
private creditors swap their Greek bonds for new ones with a 53.5 percent
lower face value, lower interest rates and longer maturity dates.
The official results will be announced early Friday.
The swap is a critical part of the country's second international bailout.
If too few investors agree and it fails, the crisis-hit country will likely
default on its debt [cnbc explains] in less than two weeks when a big bond
repayment is due, prompting renewed turmoil in financial markets and
knocking confidence in the global economy.
A government official said Thursday evening that as of Wednesday night, the
takeup on the offer had already neared 95 percent. He spoke on condition of
anonymity because the deadline for private creditors to sign up to the deal
was still hours away.
Athens has said 90 percent participation was needed for the deal to be
successful.
Markets have been optimistic that Greece will muster enough support.
The bond swap is a radical attempt to finally 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 [cnbc explains] , can gradually return to growth and
eventually repay the remaining money it owes.
The task at hand, even with the debt reduction, is massive.
Official figures released Thursday showed unemployment [cnbc explains] shot
up to a record 21 percent in December, compared with 14.8 percent last year.
It's even worse for young people with 51.1 percent of those aged between 15
and 24 out of work.
"Obviously for the majority of bondholders it does make sense to accept the
deal as it is better to get something rather than nothing and if the
exchange failed and Greece undertook a disorderly default then the
likelihood is that nothing is close to what bondholders would recover," said
Gary Jenkins, managing director of Swordfish Research.
"Thus the most likely outcome remains that Greece will receive enough
acceptances to move ahead with the deal and trigger the second bailout
package," he added
By early Thursday, banks, pension funds and other investors holding well
over half the 206 billion euro ($270 billion) total debt in public hands had
pledged to take part. New legislation will allow Greece to force holdouts
into accepting the deal if overall participation is not high enough.
About 177 billion euros of the 206 billion euros of debt eligible for the
swap are regulated under Greek law.
Italy's Premier Mario Monti was upbeat.
"The resolution of the Greek financial crisis is in sight," he said earlier
Thursday afternoon.
Only bonds held by private investors are part of the deal, meaning
outstanding amounts held by the European Central Bank and other central
banks are exempt.
Athens will announce the results early Friday, after which finance ministers
of European countries using the euro are to discuss the outcome in a
conference call.
RELATED LINKS
Will Greek Resolution Spark a Bigger Crisis?
Global Markets Counting On Successful Greek Bond Swap
Greek Bonds Accepted Again as Collateral
Deal May Not End Greek Saga
Greek Prime Minister Lucas Papademos held a Cabinet meeting Thursday
afternoon on the deal.
Finance Minister Evangelos Venizelos informed the ministers that the process
had been "going well," an official in the meeting said.
He spoke on condition of anonymity as no official announcements had been
made.
The complex bond swap, known as the Private Sector Involvement, or PSI, is
critical for Greece to secure its second bailout—130 billion euro ($171
billion) package of rescue loans from other eurozone countries and the
International Monetary Fund.
The Institute of International Finance, which has been negotiating on behalf
of large private creditors, said 32 firms holding 84 billion euro ($111
billion) of Greek bonds have signed up, including major German, French,
Greek and Cypriot banks.
German reinsurer Munich Re, which holds some 1.6 billion euro ($2.1 billion)
in Greek bonds, also will participate.
Another 17.5 billion euro ($23 billion) in bonds owned by Greek social
security funds but managed by the central bank will also be part of the swap.
Eight Greek social security or pension funds holding 3.2 billion euro ($4.2
billion) in bonds have signed up to the deal, while another six, who hold 3.
4 billion euro ($4.5 billion), have voted against.
The holdouts include funds for journalists, police, lawyers, doctors and
civil engineers.
Some other creditors, notably hedge funds, are also expected to hold out,
with some expecting to profit from payouts of so-called credit default swaps.
CDS are complex financial products, in which the CDS seller pays the CDS
holder in case of default of some underlying assets, such as a government
bond.
Initially created as a type of bond insurance, CDS have also been used by
speculators who do not own the underlying asset but hope to profit from a
default nevertheless.
Eurozone leaders and the European Central Bank [cnbc explains] wanted the
Greek bond swap to be entirely voluntary to avoid a CDS payout, which they
fear could create a cascade of losses in an already shaky financial system.
However, the International Securities and Derivatives Association, the
organization overseeing CDS, says the actual payouts on CDS's linked to
Greek bonds will be less than $3.2 billion.
The president of the German Banking Association, Andreas Schmitz, said he
doesn't expect the bond swap—even if it results in a CDS payout—to cause
turmoil.
"The consequences won't hit the market as hard as many thought even a short
while ago," Schmitz said Thursday. "I think that the market today will react
quite rationally." |
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