Success of bond swap plan hangs in the balance

The deadline set by the government for private sector involvement (PSI) in its bond rollover plan expires on Friday, and it appears that the targeted participation of 90 percent hangs in the balance.

The target represents 135 billion euros? worth of bonds maturing up to 2020. Sources on Wednesday put the level of declared participations at around 75 percent and expected a further rise today. Also, it is certain many bondholders have not publicized their intended participation.

The government has threatened to withdraw the plan if the target is not attained, but analysts consider this unlikely, as many foreign bondholders are expected to join the plan in the weeks ahead.

Separately, the Organization for Economic Cooperation and Development?s chief economist Pier Carlo Padoan said yesterday that the PSI plan appeared not to be working and other ideas should be considered.

The plan is expected to slice 13.5 billion euros off Greece?s total stock of 350 billion in public debt.

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