Greece has passed another crucial milestone for it to receive the €130-billion aid package as it secured enough backing from bondholders to go ahead with a €206- billion debt swap.

The Government was able to get 85.8 per cent of investors holding Greek debt signed up to the bond swap programme, which will deliver a 53.5 per cent haircut on their holdings.

This allows Greece to use a collective action clause to force other holders of the debt to participate. The Government said it would use this measure to enforce 95.7 per cent participation, which will enable it to achieve the €107 billion write down on debt it needs.

The participation was well above the Greek government’s target of 75 per cent, below which it said it would have been forced to drop the programme, and risk default. “Given the relatively short time they had it’s a solid result to get,” says Mr Christian Schulz, senior economist at Berenberg Bank in London.

Securing the €107-billion writedown was the next major condition for Greece to receive the bailout funds, after the Greek government met its requirements on austerity measures. Its next hurdle will be on the March 15, when the IMF is expected to decide whether or not to join the bailout. While it is not expected to participate at the 30 per cent level it did during the first round of the bailout, economists believe it is likely to contribute around 10 per cent.

European markets were muted on Friday morning, ahead of an announcement by the International Swaps and Derivatives Association on whether the swap programme amounts to a “credit event” which would trigger credit default swaps, with potential repercussions for European banks, and a potential period of uncertainty.

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