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Investors holding $106 billion in Greek debt agree to participate in bond swap
BRUSSELS (AP) ' Private investors holding some euro95 billion ($125 billion) in Greek bonds said Wednesday that they will participate in a massive debt relief for the struggling country, bringing Athens closer to avoiding default.
The Institute of International Finance, which has been leading the debt talks for large private creditors like banks and pension funds, said financial firms holding euro81 billion ($106 billion) of Greek bonds have promised to participate in the debt swap.
Greek Finance Minister Evangelos Venizelos said some euro14 billion in bonds owned by Greek investment funds but managed by the country's central bank would also be added to the debt relief. Greek officials said they are hopeful that funds that directly manage some euro3 billion in bonds would also participate.
Under the debt relief deal, private investors will swap their Greek bonds for new ones with a face value reduced by 53.5 percent, longer repayment deadlines and lower interest rates. Overall, investors will lose some 75 percent on their bondholdings.
Greece says that despite the losses, the debt swap is a good deal for investors, since they would go empty-handed if the country can't secure a euro130 billion bailout from the eurozone and the International Monetary Fund that is tied to the debt relief.
Investors holding a total of euro206 billion ($271 billion) in Greek bonds have until Thursday evening to decide whether they want to participate in the bond swap.
Athens needs to reach a participation rate of at least 66.7 percent of investors holding bonds issued under Greek law to force the deal onto holdouts. For a small portion of Greek bonds that have been issued under foreign law the participation level has to be higher.
Adding up the euro81 billion in bonds from the IIF institutions and the euro14 billion from Greek investment funds would take the participation rate to just above 46 percent. Other, smaller investors that are not part of the IIF may also already have tendered their bonds for the swap.
Paphitis reported from Athens, Greece.