Eurozone finance ministers approved on Friday the disbursement of just over 35 billion euros for Greece, a few hours after the country completed a debt restructuring scheme that will reduced the amount it owes by some 100 billion euros.
The Eurogroup approved the release of 30 billion euros to be used as sweeteners for the bondholders who took part in the swap and another 5.5 billion euros to cover interest payments.
“The Eurogroup considers that the necessary conditions are in place to launch the relevant national procedures required for the final approval of the euro area's contribution to the financing of the second Greek adjustment program,” said the head of the Eurogroup, Jean-Claude Juncker.
Eurozone finance ministers held their teleconference a few hours after Greece announced that it had successfully completed the process to restructure its debt. Almost 96 percent of 206 billion euros worth of privately-held bonds will undergo a large haircut as a result.
Of the total privately-held debt, 177 billion euros has been issued under Greek law, 18 billion euros was issued under foreign law, 7 billion euros relates to bonds issued under Greek law by public enterprises (DEKOs) and 3 billion euros to DEKO bonds that were issued under foreign law. The latter two categories are guaranteed by the Greek government.
Of the 177 billion euros, 152 billion euros worth of bonds were submitted for a haircut that would reduce their net present value by about three quarters.
This represented an 85.8 percent representation rate and allowed Greece, which needed at least 66 percent of investors holding bonds written in Greek law to participate, to trigger collective action clauses (CACs) so all holders of these bonds would suffer losses.
The Greek Cabinet approved on Friday evening the use of CACs to coerce the holdouts.
Athens said that 20 of the remaining 29 billion euros was submitted to the swap. The investors holding the 9 billion euros have until the evening of March 23 to make their final decision.
A number of European leaders said the private sector involvement (PSI) process had been a success, suggesting that the second bailout for Greece, which is worth 130 billion euros, would be cleared.
“The eurogroup was encouraged by the high private sector participation in Greece's debt exchange offer, which will make a significant contribution to improve Greece's debt sustainability,” said Juncker.