Greek parliament passes debt writedown deal
Updated: 2012-02-24 01:31
ATHENS - The Greek parliament on Thursday passed a deal on a 107-billion-euro (142.3 billion US dollars) writedown of privately-held Greek sovereign bonds, local media reported.
The massive bond swap, as part of the efforts to tackle the acute debt crisis that threatened the country with default as soon as next month, will be imposed on banks, pension funds and other private holders of Greek government bonds.
The ratification of the law came automatically, with no roll call vote this time, when the debate on the draft bill, which had started earlier in the day, winded up.
Since the two parties of the coalition government of Lucas Papademos hold a wide majority in the 300-member strong chamber, the parliamentary speaker announced that the Private Sector Involvement (PSI) plan to voluntarily erase about a third of the Greek state debt was approved.
The positive outcome clears the way for the formal offer by the Greek state expected to be made on Friday. The process is estimated to wind up by mid-March.
Under the deal reached after three-month negotiations, the private creditors will accept an over 50-percent "haircut" on the value of the bonds they currently hold in exchange with new ones with longer maturities as part of the efforts to make the Greek state debt sustainable by 2020.
The bond swap deal is closely linked with an agreement sealed in a eurozone meeting in Brussels earlier this week on a second 130-billion-euro bailout package for Greece that is expected to be released in time, so that Athens will be able to cover a 14.5-billion-euro bond repayment in late March. (1 euro = 1.33 US dollars)