Tuesday

15th Oct 2019

Greece clinches do-or-die bond-swap deal

  • 'Greece is only buying time with this and has to do its homework' (Photo: danoots)

The Greek government on Friday (9 March) said it has secured the voluntary participation of 85.8 percent of bondholders in a debt restructuring deal allowing it to avoid a messy default and to receive the second bail-out.

But forced losses to be imposed on some investors are still an issue to be discussed by eurozone finance ministers in a conference call later in the day.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"On behalf of the republic, I wish to express my appreciation to all of our creditors who have supported our ambitious program of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour," finance minister Evangelos Venizelos said in a press statement on Friday.

The tender for the bond-swap operation, aimed at slashing some €100 billion off Greece's debt, was closed on Thursday at 21.00h Brussels time. It saw 85.8 percent of mostly European banks and funds take up the offer for the new bonds, while 5.3 percent rejected them.

The participation rate is high enough for the so-called private sector involvement (PSI) operation to be deemed successful - a pre-condition for eurozone finance ministers to rubberstamp the €130 billion bail-out for Greece on Monday.

But the Greek government is now likely to impose losses on some other 10 percent of investors via 'collective action clauses' - a move which eurozone finance ministers will discuss in a conference call starting Friday at 14.00h Brussels time.

Meanwhile, in London, the International Swaps and Derivatives Association (Isda) will convene to decide if the use of these retroactive clauses is considered a "credit event" - which would mean that investors who bought insurances against Greece defaulting would have the right to claim that money. Market estimates put the total amount of these 'credit default swaps' on Greek debt around €2.4 billion, DowJones reports.

The bond-swap news was greeted with sighs of relief on Friday morning, with Asian markets rising and Spanish and Italian borrowing costs on ten-year bonds diving below five percent.

French finance minister Francois Baroin told RTL radio that the PSI results were"good news" and "something that allows us to stay on a voluntary basis that avoids the risk of default."

But investors remain sceptical as to what will happen to Greece in the long run.

Michael Kemmer, general manager of German bank association BdB, told Bloomberg: "We can't think that Greece is saved and the crisis is over. This is an important step - the private sector showed solidarity. Despite all the justified happiness about this issue we have to note that Greece is only buying time with this and has to do its homework and pursue budget consolidation, savings and its privatisation programme."

Euro ministers to approve 2nd Greek bail-out

Eurozone finance ministers are on Monday to give final approval to the second Greek bail-out. But Spain's deficit problem is likely to weigh on the talks.

EU experts to focus on tax-evading Greeks

Tax evasion remains one of the greatest challenges for experts tasked with helping Greece with administrative reform. Twelve member states are helping out.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of MinistersBrussels welcomes Nordic culture
  2. UNESDAUNESDA appoints Nicholas Hodac as Director General
  3. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  4. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  5. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  6. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  7. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  8. Nordic Council of MinistersNo evidence that social media are harmful to young people
  9. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  10. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  11. Nordic Council of MinistersEducation gets refugees into work
  12. Counter BalanceSign the petition to help reform the EU’s Bank

Latest News

  1. EU countries to halt arms sales to Turkey
  2. Nine Catalan separatist leaders given long jail terms
  3. Poland's right-wing ruler wins four more years
  4. EU powerless in new Syrian mayhem
  5. Hungarian opposition wins Budapest in blow to Orban
  6. New Dutch terror bill must not target aid workers
  7. EU proposes pesticide ban, but key documents still secret
  8. Brexit nail-biter and EU nominations This WEEK

Join EUobserver

Support quality EU news

Join us