Greece optimistic as bond swap deadline nears

By George Georgiopoulos

(Reuters) - Major banks and pension funds threw their weight behind Greece's bond swap offer to private creditors, making it increasingly likely the deal will pass and clear the way for a bailout package to avert an immediate default.

With the 2000 GMT deadline for acceptances nearing and holders of at least 57 percent of the total 206 billion euros in outstanding debt already committed, there appeared to be growing confidence in Athens that the exchange would go through.

"The pace of responses to the bond offer is good, the percentage of bondholders tendering voluntarily is very high," a government official, who spoke on condition of anonymity, told Reuters. "It is going well, we are optimistic," he said.

A senior Greek finance ministry official told Reuters the government was hopeful that well over 75 percent of eligible bonds would be submitted, easily clearing the original minimum threshold it had set for the deal to proceed.

Some hedge funds and several Greek pension funds were holding out but the high level of acceptances well before the deadline suggested that the deal was progressing smoothly despite initial warnings of a low take-up.

The European Union and International Monetary Fund have made a successful bond swap a pre-condition for final approval of the 130 billion euro ($170 billion) bailout agreed last month and ministers will decide whether to clear the package in a conference call on Friday afternoon.

Athens, totally reliant on international support to stave off a default that could set off a severe banking crisis across the euro zone, has asked its private sector creditors to accept steep losses on their Greek bond holdings.

Investors are being asked to give up almost three quarters of the value of their holdings in return for new Greek bonds in a bid to cut a public debt burden that amounts to around 160 percent of Greece's gross domestic product.

Provided it reaches a two thirds threshold of those who respond to the offer, Athens has said it will impose collective action clauses (CAC) that would allow it to impose the deal on most of the remaining bond holders.