With the deadline for Greece to accomplish a private swap with creditors now behind us, all signs seem to indicate that a chaotic default is unlikely.
Preliminary results regarding the debt deadline are not expected until the wee hours EST Friday, and European finance ministers, and other debt experts, will need to weigh in.
But the market seemed to smile, and posted a very nice close: the Dow Jones Industrial Average closed up 70.61 points, or 0.55%, to 12907.94. The Standard & Poor’s 500 Index, up 1%, posted its best two-day performance so far this year
On Greece, Dow Jones reports that:
“The head of a hedge fund involved in the Greek debt restructuring told Dow Jones he was ‘confident the participation rate went through 90%’ Thursday evening after the deadline for creditors to tender their bonds had lapsed. Hans Humes, head of Greylock Capital Management, said that ‘I am hearing from people who know what’s going on at the moment that it’s higher than 90%,’ although he had not had ‘an official declaration’ himself.”
Reuters writes that Greece had convinced at least 75% of creditors to accept a debt swap deal, the minimum threshold required to secure 130 billion euros needed to avert default. Greece had hoped to persuade 90% of creditors, and Reuters reports that as of 3 p.m. EST, a Greek official said 85% of participants signed on.
With two thirds acceptance, those sitting out may be forced to accept the deal.
Presuming a majority of the creditors in question agreed that Greece could issue new bonds, their value was estimated at 65 billion euros with average market maturity extended from 7 years to 20 years. A variety of factors, including upcoming elections and compliance requirements, point to yields on some bonds that would exceed 18%, though 20-year yields could range between 13% and 17%, according to a Morgan Stanley Research analysis.
