Greece in last ditch scramble to avoid default

Athens officials last night estimated more than 85pc of private creditors had accepted the €206bn (£173bn) bond swap shortly after a deadline expired yesterday evening. That is enough for the deal to go through, but leaves the possibility the government might have to use its controversial Collective Action Clauses (CACs).

Ratings agencies have warned they will declare a default if Greece activates the CACs, which allow the government to impose the deal on the remaining bondholders. The CACs will be used if the take-up falls below the desired 95pc but above the required 66pc.

The International Swaps and Derivatives Association (ISDA) is poised to convene again to decide if the deal amounts to a “credit event” that would trigger billions of euros of insurance.

Athens said the figures would be revealed at 6am GMT today. The 17 eurozone finance ministers have scheduled a conference call at lunchtime today to review the deal. They will meet on Monday to decide if Greece’s €130bn bail-out funds can now be released.

With the bondholder acceptance level too close to call yesterday, Evangelos Venizelos led the charge against a group of rebel Greek investors. The Greek finance minister said it was an embarrassment that six out of 15 state-controlled pension schemes – including one that serviced his own ministry – were withholding their support hours before the deadline. “When pension funds in other countries that invested in Greek bonds are taking a haircut, how can our own funds refuse to join in?” he said.

Others refused, too. Delta Lloyds, the Dutch insurer with €71m of Greek bonds, said it would not vote for a deal that would be imposed on some investors. Still, as the number of acceptances rose, stock markets across Europe rose by around 2pc each.

Most traders expected the CACs to be activated but were relieved that an orderly default was secure after eight months of wrangling. Some were still optimistic that 95pc of bondholders would accept the deal, pushing it through without a hitch. “Bondholders would be mad not to accept the offer,” said one. “The alternative is getting nothing.”

The deal, in which creditors swapped their bonds for new ones worth a quarter of the value, is designed to wipe out more than €100bn of Greek government debt by 2020. Its completion is also a key condition of Greece’s international paymasters – they will not release the €130bn bail-out funds without it. Greece needs the cash to repay a €14.5bn bond due on March 20.

Critics argue that, even with the bondholder deal, the bail-out measures are inadequate. Raoul Ruparel, of Open Europe, said: “The package still offers little hope of making debt sustainable in Greece and puts taxpayers at the risk of greater losses under what looks to be an inevitable Greek default.”