By ELENA BECATOROS By ELENA BECATOROS ADVERTISING Associated Press ATHENS, Greece — Greece’s private creditors agreed Friday to take cents on the euro in the biggest debt writedown in history, paving the way for an enormous second bailout for the
By ELENA BECATOROS
Associated Press
ATHENS, Greece — Greece’s private creditors agreed Friday to take cents on the euro in the biggest debt writedown in history, paving the way for an enormous second bailout for the country to keep Europe’s economy from being dragged further into chaos.
Greece would have risked defaulting on its debt in two weeks without the agreement, sparking turmoil in the markets and sending shock waves through the other 16 countries that use the euro.
Prime Minister Lucas Papademos called the deal which shaves some $138 billion off Greece’s $487 billion debt load an important “historic success” in a televised address to the nation Friday night. “For the first time, Greece is not adding but taking debt off the backs of its citizens.”
The country said 83.5 percent of private investors holding its government debt had agreed to a bond swap, taking a cut of more than half the face value of their investments as well as accepting softer repayment terms for Greece.
The swap aiming to turn around the country’s debt-ridden economy was a key condition to secure a 130 billion ($172 billion) rescue package from other eurozone countries and the International Monetary Fund.
The managing director of the Institute of International Finance, which negotiated the deal with Greece for large investors, called the bond swap “the largest ever” debt restructuring.
“This has been painful and the pain is not over yet. But I now can see light at the end of the tunnel for the Greek economy,” Charles Dallara told Greece’s Mega television. He estimated Greece could return to the markets “within a few years.” If recovery continues, “I think the risk for Greece and the risk on the eurozone will be very manageable,” he said.
