Count on Greek debt swap rises to 58% participation--European financial markets start to think the deal will succeed

03/07/2012 5:34 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

The count of bondholders agreeing to swap their Greek government bonds for a new issue has reached 58%, according to Bloomberg. Bondholders with 120 billion euros ($157) of Greek debt have agreed to the swap.

The 58% figure puts the offer within easy reach of the 66% threshold that would enable Greece to invoke recently added collective action clauses that would compel holders of about 90% of Greek debt to participate in the swap. (The holders of the estimated 10% of Greek bonds that weren’t issued under Greek law but that of another country such as Switzerland could not be forced to participate by the collective action clauses retroactively added to Greek-law bonds by the Greek parliament.)

This morning another 12 German financial companies signaled that they would participate in the swap, joining the country’s two biggest lenders Deutsche Bank and Commerzbank, which had said on March 5 that they would participate.

Europe’s financial markets seem to feel that the swap will succeed by the Thursday night deadline. The German DAX Index closed up 0.6% today, the French CAC Index 1.0%, and Italy’s Milan Index 1.1%. The weakest rally came from Spain’s IBEX, up only 0.1%.

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