Relief as Greece gets green light on crucial bond swap

The overwhelming majority of private investors in Greek debt have agreed to a landmark bond swap deal. If successful it will constitute the largest re-shuffle of government debt in history.

The debt swap deal is needed to avert a disastrous default and to secure a second bailout package from the EU and the IMF.

­Several senior officials have reported that some 95.7 percent of Greek bondholders have taken up the deal, Reuters says. The bonds comprise a major part of Greece’s overall debt.

Greece has also increased its offer to non-Greek bondholders until March 23.

Under the deal, which is designed to cut more than €100 billion from country’s public debt,  private creditors have agreed to take huge losses, giving up some 74 per cent of the value of their investments.

The deal will be enforced on all bondholders, activating so-called ‘collective action clauses’ on the €177 billion worth of bonds regulated under Greek law.

The agreement with private investors is a crucial part of a new bailout from the EU and the IMF aimed at averting a catastrophic default which could plunge the entire Eurozone into a deep crisis potentially harming the global economy.

The news that enough bondholders have agreed to the deal resulted in optimism, with financial markets rising strongly across the world.

"Tonight at midnight, a procedure of historic character reaches completion, an operation of unprecedented size and complexity to drastically cut Greek state debt," the Greek finance minister, Evangelos Venizelos, told parliament.

Greece is experiencing its worst economic crisis since World War II and has been on the brink of a default with debt equal to 160 per cent of its GDP.