Over 75% of private creditors agreed to a make-or-break swap on holdings of government debt, which saved Greece's economy.
The government said it needed to reach 3/4 of its debt to save bondholders from losing their money to the debt. They had until 3 pm today to reach this agreement.
The final level of participation will be announced tomorrow morning.
The results of this have been positive in Italy and Spain with a sharp rise in bank stocks and a fall in government bonds.
This is the final precondition from the IMF and the EU to get the requested bailout loan of $172 billion. The final approval is expected on Friday morning once the final level of participation is announced.
3 comments:
This article was very interesting. It will be interesting to see if the make-or-break swap on holdings of Greek government debt help the economic situation. It seems that they should, especially since the EU and IMF will give a loan to Greece if the swaps are implemented. Hopefully, this helps stabilize the situation in Greece and there is not too much backlash from those who did not agree to the swaps, although the article argues that there may be.
This temporary relief of the government debt will allow Greece to take a breath and get back on track. Moreover, as it says in the article, the attainment--75% of private creditors’ agreements to a make-or-break swap on holdings of government debt--will also qualify Greece to obtain a bailout loan of $172 billion from the IMF and the EU. This is equal to a double guarantee of Greece’s recovery from its economic crisis. However, the problems Greece is facing now are still tough and impending. Therefore, what policies Greece should implement and how to implement them now is the crucial challenge for Greece.
I would be interested to see an article from the perspective of the individual investors. From what I can tell, increasing Greek fortunes would be better for each investor. In the current state of Greek affairs, the prospect for any repayment of current debt seems dire. However, if Greece is able to receive the IMF bailout, which is dependent on debt restructuring, some payout seems likely. I would be curious to see why 25-30% of investors refused to take the deal- and whether it was more out of stubbornness or actual belief that they could get a deal that forced them to accept a lesser percentage of losses.
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