Bond swap deal on 'knife-edge,' FT says

Greece's debt swap deal rests on a “knife edge” amid doubts over the level of participation by private bondholders, the Financial Times reports.

“The government’s tender offer has got off to a slow start, with its advisers trying to round up non-institutional bondholders and even Greek investors showing reluctance to sign up quickly,” the newspaper said quoting insider sources.

The success of the 106 billion-euro debt swap, confirmed on the eve of last week’s European Union summit, depends on how many investors agree to the writedown by the Thursday deadline. Eurozone finance ministers will hold a teleconference Friday to review the deal’s outcome.

The Greek government has set a 75 percent participation rate as a threshold for proceeding with the transaction. Failure to do so will trigger the so-called “collective action clauses” that will allow Greece to force all bondholders to proceed with the swap once it has secured a specified level of approval.

“People involved in the deal denied that there was any nervousness about the outcome but nobody was willing to guess how high the participation rate would be,” the FT said.

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