Greece to go ahead with crucial debt swap.

BBC - Greece has said it has received enough backing to push through the largest restructuring of government debt in history.

Holders of 85.8% of debt subject to Greek law and 69% of its international debt holders agreed a debt swap, according to the Ministry of Finance.

Take-up was high enough for the government to force unwilling investors to consent to the deal.

Athens needed to get 75% to push through the deal.

The European Union and International Monetary Fund have said that if the debt swap does not go through then Greece will not get its latest bailout of 130bn euros (£110bn; $173bn).

The Greek Finance Ministry had made it clear that the alternative to the debt swap is a potential default.

So far the deal involves 172bn euros worth of debt, according to the Greek government website, with investors taking a total loss of up to 74%.

The deal should cut 107bn euros from Greece's total government debt.

Investors are now waiting to see if forcing Greek bondholders to take the deal - or enforcing so-called Collective Action Clauses - will be deemed as a default.

The International Swaps and Derivatives Association will meet later on Friday - at 13:00 GMT - to determine whether the deal would be deemed a so-called "credit event" - a technical default - which would trigger the payment of credit-default swaps, which is essentially insurance against a default.

However, the ISDA reports that CDS payouts are likely to be around $3.2bn, so lower than previously feared.

Markets rallied strongly on Thursday on hopes that the deal would go through - with the stock market in Athens up more than 3% and the markets in Paris and Frankfurt also higher.

Greece said it has extended the deadline for bondholders not governed by Greek law to sign up until 23 March.

"On behalf of the republic, I wish to express my appreciation to all of our creditors who have supported our ambitious programme of reform and adjustment and who have shared the sacrifices of the Greek people in this historic endeavour," Finance Minister Evangelos Venizelos said.

"Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth."

The deal was also welcomed by representatives of private sector lenders to Greece, who said it paved the way for agreement on the EU bailout.

"The very strong and positive result provides a major opportunity now for Greece to move ahead with its economic reform program, while strengthening the euro area's ability to create an economic environment of stability and growth," said Josef Ackermann, chairman of the International Institute of Finance, which represents private lenders.

Economic and Monetary Affairs Commissioner Olli Rehn said earlier this week that there would be no better offer.

He said: "It is important that all investors recognise that Europe has committed the maximum funds available to this voluntary debt exchange and that full participation is necessary for the Greek programme to move forward."

The Greek bailout is also conditional on the country implementing a further round of austerity measures.

The government is pushing through spending cuts equal to 1.5% of its output, including cuts in pensions and civil service job cuts.

It has also been told to make its economy more competitive by cutting the minimum wage and making labour markets more flexible.

The aim is to cut the Greek government's debt from 160% of GDP to a little over 120% of GDP by 2020.

Some economists fear further austerity measures will damage the economy increasing the chance Greece will require more bailouts or debt write-offs.

The economy shrunk by 7% in the three months to December, compared to the same period in 2010.

Others argue the economy will become more competitive, attracting investment and generating jobs.

"This does not mean the debt situation in Greece is resolved, and this is not the last time we will be hearing about this. But it is a relief that it didn't go the other way. It could have been a lot worse," said Tim Ghriskey, chief investment officer at Solaris Group in New York.