Greek Parliament on Thursday endorsed the debt swap deal with its private creditors, clearing one of the main hurdles for securing a rescue package worth 130 billion euros, approved by its international creditors earlier this week.
Under the deal, banks and other private creditors will have to write down 53.3 percent of the nominal value of their Greek bond holdings, slashing the country's debt burden by 107 billion euros.
The country aims to reduce its debt by 120.5 percent of GDP by 2020, from the current 160 percent. The Parliamentary nod for the bond swap clears the way for the Greek government to launch a formal offer on Friday.
The process is expected to be completed by March 12, before the 145-billion euro bond repayment deadline of March 20.
The austerity measures agreed upon by the Parliament are expected to deepen the country's recession. The economy contracted 7 percent year-on-year in the fourth quarter, marking the fifth straight decline in the gross domestic product.
On Wednesday, Fitch Ratings cut Greek bond ratings to 'C' from 'CCC' and said a default is highly likely in the near term.
After the Eurogroup meeting, the Greek government has confirmed its intention to introduce collective action clauses, or CACs, into those Greek Government bonds governed by the Greek law.
Fitch had said it regards the imposition of retrospective CACs as material adverse change in the terms and conditions of GGBs in the context of an imminent debt exchange. The exchange will be distressed and de facto coercive on private holders of Greek bonds, Fitch said.
Fitch also said that it considers the proposal to reduce Greece's public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country's IDR being lowered to 'Restricted Default' upon completion.
Meanwhile, External Relations Department Director of the International Monetary Fund Gerry Rice said that the exact figure of the IMF's contribution to the Greek rescue package is not yet finalized.
When asked about reports that the IMF is considering financing worth 13 billion euros to the second batch of Greek package, Rice said "that is something that's to be discussed with our Board." He reiterated IMF Chief Christine Lagarde's statement that a decision regarding this might be done around mid-March.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.