vhfmh

DEBT CRISIS: Greece erases part of the debt held by private creditors

 

AFP - Greece has avoided bankruptcy by obtaining uncontrolled Friday agreement by a substantial majority of its private creditors to reduce and reschedule its huge debt, paving the way for the implementation of the second bailout of its funders EU and IMF. After several months of arduous international negotiations, Greece has collected 83.5% of acceptance of all its creditors to exchange their shares, which only 85.8% of the bondholders under Greek law, announced early Friday the Greek government. The operation, the largest of its kind ever conducted in the world is designed reduced to 120.5% of GDP the national debt by 2020, against 160% currently, a rate which remains very high by any international standard. If Greece avoid a default unchecked, the rate of assent collected from private creditors, however, is insufficient to meet the 90% target that the government had set. Which is why he had to recommend the activation of collective action clauses (CAC) attached to the bonds to be exchanged. These clauses are forcing carriers reluctant to accept the terms of trade and should be ultimately the acceptance rate to 95.7%, said the Ministry of Finance said in a statement. The decision whether to activate the ACC clauses will be taken in the afternoon during a meeting of finance ministers of the euro area due to start at 13.00 GMT in Brussels. Meanwhile, in a ballet international financial perfectly oiled, another international committee (ISDA) must be re ; together at exactly the same hour to decide whether the use of clauses (CAC) causes or non payment of CDS insurance subscribed by investors to hedge against a default on the greece. These CDS can be activated when there is a "credit event" ;, that is to say a change in the pattern of repayment from a borrower, such as the use of clauses binding on creditors who are no longer considered " ; volunteers ".  If Greece had obtained more than 90% of assent from the outset, it would no need to activate the ACC clauses. March 2, total CDS underwritten on Greece reached $ 3.16 billion in net according to the American reference agency, an amount considered manageable by several members of the banking sector so that these instruments have been widely blamed for the worsening international financial crisis of 2008. "I wish to express my gratitude to all our creditors who supported our ambitious reform agenda and adjustment and shared sacrifices of the people in its historic effort "praised the Greek Finance Minister Evangelos Venizelos said in a statement. The exchange of specific securities to be held Monday, March 12 for bonds by Greek law, but a die ; lai additional current until 23 March at 0800 GMT was granted to holders of Greek law not wishing to join the ranks of participants in the exchange. On the part of the securities of foreign law, participation is only 69%. The delay means that the final participation rate could increase. It does not allow those who have already joined to the bid to reverse their decision. Charles Dallara, head of the Institute of International Finance (IIF), which negotiated for several month on behalf of banks in terms of the bond exchange with the Greek government, also welcomed Friday by estimating the result of the operation "reduces the risk Contagion of allowing Greece to continue its reform efforts. " Same story on the side of the French finance minister who Baroin described as "good news and great success" the result of the operation. Friday, the euro zone could also decide on starting the second aid plan Greece, which pays out a second loan of about 130 billion euros in aid by 2015.