| 8.5°C Dublin

Debt Crisis: Big banks holding €81bn in Greek bonds row in behind deal to save country

Close

Greece's Prime Minister Lucas Papademos. Photo: Reuters

Greece's Prime Minister Lucas Papademos. Photo: Reuters

Greece's Prime Minister Lucas Papademos. Photo: Reuters

BIG banks and pension funds have thrown their weight behind the attempt to avoid a messy Greek default as holders of €81m of the country’s bonds said they will participate in the debt relief programme.

The 39pc support for the debt swap deal comes ahead of tomorrow’s deadline and after a warning from the Institute of International Finance which yesterday said that a disorderly default would cost at least €1 trillion.



Private investors exposed to Greek debt will swap their bonds for new ones but face an overall loss of 75pc on their holdings as well as longer repayment times and lower interest rates.



Greece, under the stewardship of technocrat leader Lucas Papademos, claims that despite the losses the loss represents a good deal for investors as the alternative is to go empty-handed if the country could not secure the €130bn in bailout loans from the EU/IMF/ECB troika.



Investors hold a total of €206bn in Greek bonds.



Under the rules, Greece needs to secure a participation rate of over 66pc but for some of the bonds the rate must be higher.



A rate of more than 75pc but less than 90pc is seen as the most likely come by analysts.



Stock markets were more buoyant today having fallen yesterday on hopes that a deal will be signed off on.