Greek Debt Resolved

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Greece has managed to finalize a debt restructuring deal with private lenders. This deal allows for the release of bailout funds from Europe and the International Monetary Fund. Overall, Greece is no longer in danger of default.

Private creditors holding 177 billion euros in bonds agreed to the bond swap, and additionally 20 billion euros were gained from investors holding a Greek bond, but not bound by Greek law. This was surprising as many people expected investors to challenge Greece in court or wait for a better deal.

These high numbers demonstrate the success of an aggressive legal strategy that involved compelling bond holders to give up their shares even though they would lose a lot of money. The legal approach was seen as risky from the beginning, but their forceful stance caused lenders to eventually give up their bonds.

The Institute of International Finance sent a confidential memorandum to European leaders with estimates of huge losses that would result if there was a sudden default by Greece. This seemed to have an effect on some of the holdouts. However, most attribute the success of this deal to the Greek government's blunt approach with investors.