Greece's prospects were looking rosier Thursday
after months of glum news, with eurozone finance ministers saying
that Athens had made headway on their demands and a financial group
finding that part of its debt write-off does not amount to a default.
"With what I have heard so far, it looks as if Greece has made big
advances," German Finance Minister Wolfgang Schaeuble told reporters
before a special meeting with his eurozone counterparts in Brussels.
"We are really satisfied with the progress in Greece," French
Finance Minister Francois Baroin added. "We are going in the right
direction and I think we can have an agreement on that."
Even the usually guarded chief of the International Monetary Fund,
Christine Lagarde, said that she had "a quite positive impression of
the hard work that has been done."
The ministers' Eurogroup panel was tasked with reviewing if the
Greek parliament had met a Feb. 29 deadline for the approval of
key economic reform and austerity measures that were attached to the
country's second 130-billion-euro ($174 billion) bailout.
Schaeuble predicted that "an important step forward" would be
taken.
But Dutch Finance Minister Jan Kees de Jager -- one of Athens' most
outspoken critics -- said that Greece would first have to be found to
have taken "effective prior actions ... for the full amount."
"If not, we cannot definitely make a conclusion today," he said.
The ministers' discussions began just four hours before the
expected start of a two-day European Union summit.
Greek Finance Minister Evangelos Venizelos was later expected to
sign agreements for the release of part of the eurozone's money,
which is needed to accompany a deal that is hoped to convince private
banks to write off more than 100 billion euros of Greek public debt.
"This is a very good, a unique offer," he said as he arrived in
Brussels. "We are waiting for the response of the markets."
Banks, hedge fund and insurance funds have until March 8 to accept
the Greek debt write-off deal. The eurozone is then expected to sign
off once and for all on the Greek bailout in the following week,
Eurogroup chief Jean-Claude Juncker said Wednesday.
Athens needs the money by March 21 to avoid bankruptcy on a
14.5-billion-euro bond redemption.
In London, meanwhile, the International Swaps and Derivatives
Association (ISDA) ruled Thursday that action by the European Central
Bank to shield its holdings from the 70-per-cent debt write-off on
Greek debt does not constitute a "credit event."
A credit event would have triggered payment of credit default
swaps (CDS), a form of insurance against default. Many financial
speculators had bet on such an event, hoping to make money on the
Greek bonds they bought at a steep discount in recent months.
CDS payments following the collapse of U.S. investment bank Lehman
Brothers in 2008 wrought havoc on financial markets and contributed
to the global spread of the crisis.
The ISDA did warn, however, that "the situation in the Hellenic
Republic is still evolving" and that the decision was not an
expression of any view "as to whether a credit event could occur at a
later date."
The London-based body still needs to deliver another verdict on
whether parallel action by the Greek parliament to force all private
lenders to accept the debt write-off through so-called collective
action clauses might also trigger a credit event.
