ATHENS: Greece clinched a high-stakes debt swap on Friday, paving the way for an urgent bailout needed for the stricken eurozone member to avoid default.
Some 83.5 percent of its private creditors tendered bonds for exchange, amounting to approximately 172 billion euros of debt, the Greek finance ministry announced early on Friday.
The success of the debt swap plan means Greece will be able to avoid a devastating default as early as March 20 that could have cost the eurozone one trillion euros and sent shockwaves around the globe.
The news sent Asian markets sharply higher Friday, with shares in Tokyo closing at their highest level in seven months.
A little before the official take-up rate was announced, IMF head Christine Lagarde said the risk of crisis in the eurozone has been "removed" for now.
"As we speak, it looks like it's going through," Lagarde said in an interview with US broadcaster PBS adding that the "real risk of a crisis, of an acute crisis, has been, for the moment, removed."
The participation is solidly higher than the 75 percent threshold Greece had said it wanted to proceed with the deal and the Greek government now intends to activate so-called collection action clauses that will force holdouts to also join the deal.
Greece "intends to accept the consents received and amend the terms of all of its Greek law governed bonds, including those not tendered for exchange," the government said in a statement.
Once enacted, the clauses are expected to boost final participation in the debt swap to 95.7 percent, the ministry said.
But the clauses could also trigger anti-default insurance contracts, known as credit default swaps, whose net value was estimated at 3.2 billion euros in February.
Eurozone finance ministers are set to review the swap in a conference call later Friday, and weigh in particular the necessity to trigger the clauses.
The International Institute of Finance, a global bank association that had helped broker the deal, on Friday welcomed the result which it said would give Greece "breathing space" to implement tough reforms.
"The very strong and positive result provides a major opportunity now for Greece to move ahead with its economic reform program, while strengthening the Euro area's ability to create an economic environment of stability and growth," said Deutsche Bank head Josef Ackermann, who also chairs the IIF.
The IIF's managing director Charles Dallara added the voluntary exchange "reduces the risks of contagion in the markets, while it enables Greece to build on the strengths of the reform efforts themselves."
And directors from the International Monetary Fund have tentatively planned to meet to weigh a new loan for Greece on March 15, spokesman Gerry Rice said on Thursday.
The EU and IMF have said that a participation rate of 95 percent is necessary to reduce Greek debt to a sustainable level of 120 percent of gross domestic product in 2020.
The writedown is the biggest attempted so far, overshadowing Argentina's $82-billion default in 2002, the equivalent of 73 billion euros at the time.
It is designed to erase more than 100 billion euros ($132 billion) from Greece's near and midterm debt and replace it with new maturities.
The exercise is meant to make repayment of the debt, currently at over 350 billion euros, more sustainable in the immediate future, thereby giving the struggling Greek economy much needed breathing room.
Failure to reach a deal would have increased the danger of a disorderly default that the IIF warned could cost eurozone nations one trillion euros.
This could have come as quickly as March 20, when Athens was due to reimburse a three-year bond worth 14.4 billion euros.
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