March 9, 2012

Greece Gets 95% Participation in Debt Swap

Pushes bondholders to participate

Greece said that participation in its bondholder swap stood at 95.7% after it pressured private bondholders to participate by saying it would trigger collective action clauses. It also extended, until March 23, sweeteners for holdouts in possession of bonds not written to conform to Greek law.

Bloomberg reported Friday that Germany and other eurozone governments called the swap a success, and that they would decide on a conference call whether to proceed with the second bailout. An hour and a half after the decision is made, the International Swaps and Derivatives Association plans to meet to consider a “potential credit event” relative to Greece.

Greek Finance Minister Evangelos Venizelos was quoted saying, “The debt-swap results show that international markets see the prospects the Greek economy has to regain a sustainable fiscal situation.”

Josef Ackermann, chairman of the Washington-based Institute of International Finance, which represented private bondholders in negotiations with the Greek government, was quoted saying that the result was “very strong and positive. These are important steps towards resolving the Greek debt crisis, addressing the overall fiscal and sovereign debt problems in the euro area, and restoring financial stability.”

Steffen Seibert, chief spokesman for German Chancellor Angela Merkel, said that Merkel was “pleased” by the “high level participation of private creditors,” and added that it was “an encouraging result that will help put Greece on a path to stability. What’s important now is for Greece to seize the opportunity offered by this debt swap, meaning it implements the agreed programs.” France also expressed approval of the swap.

Pawan Malik, managing director of Navigant Capital, was quoted saying, “There was a small possibility that for whatever reason, the participation would be so high that the CACs may not need to get triggered. For the markets this may be a mild negative today.”

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