Reports are coming in that Greek cabinet ministers are claiming the take-up for the Greek PSI is near 80%, enough to avoid a 'default'. The official Greek statement is scheduled now for Friday morning.
Once at least 66% of participants officially accept the deal, they will be paid out a cash payment equal to 15% of the original bonds. How an 85% haircut can be called anything other than a default (with a straight face) is a question better posed for the ISDA.
“It will be good news tonight,” one Greek cabinet minister told the FT just before Thursday night’s deadline. “Take-up will be around 80 per cent.”
The Greek government is now expected to trigger so-called “collective action clauses”, introduced into bonds in recent law, to impose the 53.5 per cent loss on all holders of bonds issued under Greek law. In order to use the CACs, Athens needed 66 per cent of participants to agree the deal; by getting close to 80 per cent, the hurdle would be cleared safely.
Once CACs are triggered, all €177bn in Greek-law bonds will be swapped for a cash payment equal to 15 per cent of the old bond and new Greek bonds worth 31.5 per cent – wiping about €100bn from Athens’ €350bn debt pile.