- Al Sharpton, Trayvon Martin’s parents rally against Fla. ‘stand your ground’ law
- Hillary Clinton campaign got illicit funds from D.C. scandal figure
- Obama administration backs off plan to cut prescription-drug program
- Tickets linked to stolen passports purchased by Iranian middleman
- More than 3,500 police planned for Boston Marathon
- Ottawa day care suspends 2-year-old for ‘outside’ cheese sandwich
- Liam Neeson tells NYC mayor to ‘man up’ in horse carriage fight
- Real-life Dr. Doolittle to reveal how to talk to animals
- Climate change could bring back smallpox, researchers say
- Shoe-bomb witness to speak from London at N.Y. trial
Greece closes in on target in bond swap deal
The complex bond swap, known as the Private Sector Involvement, or PSI, is critical for Greece to secure its second bailout — a 130 billion euro ($171 billion) package of rescue loans from other eurozone countries and the International Monetary Fund.
The Institute of International Finance, which has been negotiating on behalf of large private creditors, said 32 firms holding 84 billion euros ($111 billion) of Greek bonds have signed up, including major German, French, Greek and Cypriot banks. German reinsurer Munich Re, which holds some 1.6 billion euros ($2.1 billion) in Greek bonds, also will participate.
Another 17.5 billion euros ($23 billion) in bonds owned by Greek social security funds but managed by the central bank also will be part of the swap. Eight Greek social security or pension funds holding 3.2 billion euros ($4.2 billion) in bonds have signed up to the deal, while another six, who hold 3.4 billion euros ($4.5 billion), have voted against. The holdouts include funds for journalists, police, lawyers, doctors and civil engineers.
Some other creditors, notably hedge funds, are also expected to hold out, with some expecting to profit from payouts of so-called credit default swaps (CDS).
CDS are complex financial products, in which the CDS seller pays the CDS holder in case of default of some underlying assets, such as a government bond. Initially created as a type of bond insurance, credit default swaps also have been used by speculators who do not own the underlying asset but hope to profit from a default nevertheless.
Eurozone leaders and the European Central Bank wanted the Greek bond swap to be entirely voluntary to avoid a CDS payout, which they fear could create a cascade of losses in an already shaky financial system.
However, the International Securities and Derivatives Association, the organization overseeing CDS, says the actual payouts on credit default swaps linked to Greek bonds will be less than $3.2 billion.
The president of the German Banking Association, Andreas Schmitz, said he doesn’t expect the bond swap — even if it results in a CDS payout — to cause turmoil.
“The consequences won’t hit the market as hard as many thought even a short while ago,” Mr. Schmitz said Thursday. “I think that the market today will react quite rationally.”
Gabriele Steinhauser in Brussels and Jovana Gec in Belgrade, Serbia, contributed to this article.
TWT Video Picks
By David Keene
Conference showed that the values Reagan cherished still endure
- FCC targets black conservative in TV station fight
- Kim Jong-un calls for execution of 33 Christians
- Hillary Clinton campaign received funds from Jeffrey Thompson
- Senate Democrats, Republicans spar over restoring unemployment benefits
- Sharyl Attkisson resigns from CBS after months of talks
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- DHS accused of holding U.S. citizen at airport, using emails to pry into her sex life
- Russias Putin nominated for Nobel Peace Prize
- 80 people publicly executed across North Korea for films, Bibles
- Mitch McConnell on beating tea party: 'We are going to crush them'
Pope Francis meets his 'mini-me'
Celebrity deaths in 2014
Winter storm hits states — again