Investors holding 85.8 per cent of Greece's private debt have agreed to participate in the country's €206 billion debt restructuring, clearing the way for Athens to complete the world's largest ever sovereign default.
A statement from the Greek finance ministry said that participation would rise to 95.7 per cent after collective action clauses (CACs) were activated to force holdout investors to participate. Pantelis Kapsis, the government spokesman, said: “This successful agreement will have a stabilising effect on Greece’s position”. The German finance ministry went even further, describing the high take-up rate as a “historic opportunity for the country”.
Once the CACs are triggered, all €177 billion worth of bonds issued under Greek law – or 86 per cent of all Greek debt in private sector hands – will be swapped for a cash payment equivalent to 15 per cent of their original holding. They will also be issued new Greek debt worth 31.5 per cent of their old bonds. The two measures will wipe about €100 billion from Athens’ €350 billion debt pile, and will leave investors with 24 new securities. “This extraordinarily difficult idea allows Europe to avoid what could have been an enormously costly, disorderly default”, said Charles Dallara, chief negotiator for Greek bondholders.
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