Bloomberg News

Euro-Area Allies See Greek Swap as Historic Chance to Reform

March 09, 2012

Germany said Greece has a “historic chance” to fix its economy after securing a debt-reducing bond swap that fellow euro-area governments declared a success.

Germany, France and Italy, the three biggest economies in the 17-member euro region, hailed the exchange after the results were announced in Athens today. Germany, the biggest country contributor to bailouts during the debt crisis and which led calls for the private sector to take writedowns in Greece, said the Greeks must now grasp the opportunity to reform.

The swap is “a big step on the road to stabilization” and Greece “has been given a historic chance,” Germany’s Finance Ministry said in a statement. Economy Minister Philipp Roesler said Greece must now overhaul its economy, saying in a separate statement that the country “has it in its own hands to fulfill the conditions for standing on its own feet again.”

Two years after triggering Europe’s debt crisis, the Greek government said it met its target in the biggest sovereign restructuring in history. Euro-area governments were waiting for the outcome before deciding on a 130 billion-euro second financial rescue for Greece. Finance ministers have set a conference call for 2 p.m. Berlin time.

The debt restructuring is “good news” and meets “all the objectives we set ourselves,” French Finance Minister Francois Baroin said on RTL Radio today after Greece said it reached a 95.7 percent participation rate among holders of eligible bonds.

Italian Deputy Finance Minister Vittorio Grilli said Greece’s planned use of collective action clauses to force holdouts to take part in the swap won’t necessarily constitute a so-called credit event.

If the swap triggered credit default swaps “it is not taking anyone by surprise,” Grilli said in an interview with Bloomberg News. “It is already priced in.” In any case, the bond swap can be called “a success,” Grilli said. “It has been a long trail.”

To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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