Friday, February 24, 2012

Greece launches debt swap offer

Financial Times
February 24, 2012

International banks are now tasked with tracking down all the private sector holdings, of which a large slice is owned by Greek banks. “We are making a titanic effort to secure financial support for the country,” said Lucas Papademos as he left a cabinet meeting that approved the debt swap.

Charles Dallara, managing director of the Institute of International Finance, said a “historic” and “unprecedented” restructuring of Greek bonds may help restore confidence in the debt-strapped country.

“This is an historic, unprecedented restructuring of sovereign debt,” Mr Dallara said at a press conference in Mexico City. “If this deal is successful, it will lift a huge cloud off the back of the Greek economy” and “can help set Greece on a path of restoring confidence”.Friday, a crucial next step in the eurozone’s efforts to restructure the country’s debts and avoid a messy default.

Greece must get nearly all of the owners of the €206bn of debt to take part in the PSI or debt swap in order to start receiving the €130bn of rescue funds. Bondholders face a possible 75 per cent cut in the value of their holdings. Athens and the bond owners have to reach agreement by March 12.


No comments: