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Greek Debt Exchange

Brussels, February 28, 2012 — The international media has reported extensively on the agreement reached in Brussels in support of Greece. Please see news reports from all major media (example).

Charles Dallara, managing director of the Institute of International Finance, which negotiated the swap on behalf of bondholders, said, “It will be up to individual investors to determine their own particular courses, following their own internal processes…This is a solid deal for investors a fair deal for all parties and one that holds considerable benefits for Greece.”

Under the deal, investors will forgive 53.5 percent of their principal and exchange their remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility. The plan seeks to reduce Greece’s debt burden by 107 billion euros, about half the country’s estimated gross domestic product for 2011, the IIF said. Bondholders will exchange 31.5 percent of their principal into 20 new Greek government bonds with maturities of 11 to 30 years and the rest into short-dated notes issued by the EFSF. The coupon on the new bonds was set at 2 percent until February 2015, 3 percent for the following five years and 4.3 percent until 2042.

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