The deadline for participation in the biggest sovereign debt restructuring in history expired late on Thursday. Greece announced early on Friday that 85.8 percent of private sector creditors have accepted to voluntarily participate in the PSI debt swap deal, which would result in a haircut of 50 percent and giving up half of the face value of their existing bonds in the 206 billion euro swap deal.
Although the results were broadly in line with expectations and followed a day of euro gains on optimism over the debt swap, Greek authorities said that this number falls short of the required rate of 90 percent in order to be able to receive the second bailout from international lenders. The Greek government said that they would have to activate collective action clauses (CAC’s) to force other creditors to participate, resulting in a boost of the participation rate to 95.7 percent.
The ISDA (International Swaps and Derivatives Association) has made arrangements to meet at 13:00 GMT to decide whether the activation of the collective action clauses would mean that Greece has suffered a “credit event”.
After this morning’s announcement by Greece that it will activate the CAC’s, the euro fell across the board, with EURUSD dropping to 1.3211 from an earlier high of 1.3270.