Friday, March 9, 2012

Venizelos: Greek bond swap 'exceptional success'

The Greek Finance Minister, Evangelos Venizelos, hailed the winning strong acceptance from its private creditors for a bond swap deal an “exceptional success.” The deal was demanded by international leaders in return for the 130 billion euro ($172 billion) bailout.

With the successful operation Greece averted the immediate risk of an uncontrolled default.

The European Union said the swap, under which private creditors have accepted heavy losses on their Greek bond holdings, would make a "decisive contribution to financial stability in the euro area as a whole".

"Today, after a very long time, is a very good day (for the country) as well as for me personally," Venizelos told lawmakers, saying the deal had cut Greece's debt burden by 105 billion euros.

"I hope everyone will realise, sooner or later, that this is the only way to keep the country on its feet and give it the second historic chance that it needs," said Venizelos, who negotiated Greece's second bailout since 2010 with the European Union and International Monetary in often ill-tempered talks.

Under the biggest sovereign debt restructuring in history, Greece's private creditors will swap their old bonds for new ones with a much lower face value, lower interest rates and longer maturities. This means they will lose about 74 percent on the value of their investments, slicing more than 100 billion euros off Greece's crippling public debt.

The finance ministry said creditors had tendered 85.8 percent of the 177 billion euros in bonds regulated by Greek law. This would reach 95.7 percent of all privately-held Greek debt with the use of "collective action clauses" to enforce the deal on creditors who refused to take part voluntarily.

European Economic and Monetary Affairs Commissioner Olli Rehn, a leading figure in efforts to protect far bigger economies with debt problems such as Italy and Spain, said he was very satisfied with the private creditors' response.

"That contribution by the private sector is an indispensable element to ensure future sustainability of the Greek public debt and, thus, a decisive contribution to financial stability in the euro area as a whole," Rehn said in a statement.