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Success of Greek Bond Swap Plan Hangs in Balance

Adequate private sector participation in a Greek debt swap meant to help the southern Mediterranean country avoid default hung in the balance Friday, radio reports said.
Banks and insurers were expected to indicate whether they intend to join in the debt swap, part of a planned second international bailout package agreed in July, by the end of the week.
Greece is in the midst of a major financial crisis and has avoided bankruptcy only after receiving two successive international bailouts worth a total 220 billion euros from its fellow euro-zone partners and the International Monetary Fund (IMF).
Reports said that it was still too early to determine the number of participants involved in the plan but that private sector participation was expected to reach 70 per cent.
The Greek government has said that it will not proceed with the project unless a target of 90 per cent is reached, but the Greek daily Kathimerini newspaper quoted analysts as saying this was unlikely, as many foreign bondholders are expected to join the plan in the week ahead.
Under the plan, private bondholders will take a loss of about 21 per cent on their bond portfolios as part of attempts to share the burden of the bailout deal.
The target represents 135 billion euros worth of bonds maturing up to 2020.
Earlier this week, the International Institute of Finance (IIF), a global banking group that is leading the bond swap talks, said it was confident the plan would eventually garner the necessary investor support.
(source: DPA)

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