Greece secures high participation in bond swap

By Elena Becatoros

Associated Press

Published: Friday, March 9 2012 2:30 a.m. MST

"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 endeavor," Finance Minister Evangelos Venizelos said. "With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth."

Venizelos is to hold a news conference later Friday, ahead of a conference call between the finance ministers of the 17 European Union countries that use the euro to discuss the deal's results.

Germany's Finance Ministry welcomed the outcome, describing the wide acceptance of the bond swap as "a big step on the path of stabilization and consolidation" that has "given Greece a historic opportunity."

The ministry said it is now awaiting the assessment of Greece's so-called troika of international creditors as to whether the result fulfills the conditions set by the eurogroup, followed by Friday's eurozone teleconference.

The International Swaps and Derivatives Association said it would also meet later Friday to determine whether the deal would be deemed a so-called "credit event" — a technical default — which would trigger the payment of credit default swaps, which is essentially insurance against a default.

When the debt relief plan was first announced last year, eurozone leaders and the ECB worked hard to avoid a credit event, because they feared the a payout of CDS could destabilize big financial institutions that sold them.

However, since then a CDS payout has started to look less threatening. The ISDA, a private organization that decides on credit events, said that if triggered, overall payouts on CDS linked to Greece will be below $3.2 billion. That amount is spread over many financial firms and likely too small to significantly hurt any one of them.

The bond swap deal is an essential part of Greece's second international bailout, and the country now hopes to start receiving funds from the €130 billion package of rescue loans. The IMF has set a tentative board meeting date of March 15 to discuss the size of its participation in Greece's second bailout.

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Nicholas Paphitis in Athens, Gabriele Steinhauser in Brussels and Geir Moulson in Berlin contributed to this report.

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