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Eurozone finance ministers approve release of €35.5bn in aid to Greece

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85 and a half per cent of private investors holding its Greek-law bonds have signed up to the deal. Photo: Getty Images

85 and a half per cent of private investors holding its Greek-law bonds have signed up to the deal. Photo: Getty Images

85 and a half per cent of private investors holding its Greek-law bonds have signed up to the deal. Photo: Getty Images

EUROZONE finance ministers have approved a €35.5bn tranche of funding aid to Greece following the debt swap deal agreed with banking creditors.

The EU/IMF/ECB troika had demanded the bond swap as a condition for a total €130bn bailout package, the country's second since 2010.

Earlier Greece secured a high enough participation in its critical bond swap offer to drastically reduce its debt, staving off an imminent default and paving the way for the release of funds from international rescue loans.

Greece said that 85.8pc of private investors holding its Greek-law bonds had signed up to the deal, and that it aimed to use legislation forcing holdouts to participate.

It extended the deadline for holders of foreign-law bonds, of whom 69pc have so far signed up, until March 23.

The deal aims to slash the country's national debt by 107 billion euro, with private bond holders accepting a face-value loss of 53.5pc, in exchange for new bonds with more favourable repayment terms. If the swap had failed, Greece would have faced defaulting on its debts in two weeks, when it faced a large bond redemption.

The International Swaps and Derivatives Association said it would also meet to determine whether the deal would be deemed a so-called "credit event" - a technical default - which would trigger the payment of credit default swaps, which is essentially insurance against a default.

The bond swap is a radical attempt to pull Greece out of its debt spiral and put its shrinking economy back on the path to recovery. The hope is that by slashing the overall debt, the country, which is in a fifth year of recession, can gradually return to growth and eventually repay the remaining money it owes.

"I wish to express my appreciation to all of our creditors who have supported our ambitious program of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour," finance minister Evangelos Venizelos said.

"With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth."

The deal was an essential part of Greece's second international bailout, and the country now hopes to start receiving funds from the multi-billion pound package of rescue loans from other eurozone countries and the International Monetary Fund.

PA Media