BBC News - Greece debt swap deadline looms

A leading European Union official has urged private holders of Greek bonds to sign up to a vital debt swap deal ahead of a deadline later on Thursday.

If Greece wants to secure vital new bailout funds it has to get agreement on a debt swap deal

Economic and Monetary Affairs Commissioner Olli Rehn said there would be no better offer, and the deal was vital for eurozone financial stability.

Greece needs at least 75% of bondholders to agree to take a 53.5% cut in the value of their holdings.

Greece needs the deal if it is to receive a second bailout.

The package from the European Union and International Monetary Fund would be worth 130bn euros ($171bn; £109bn).

Mr Rehn 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 program to move forward."

Private investors have until 2000 GMT on Thursday to agree to the debt swap on the 206bn euros of Greek bonds they hold.

On Wednesday, the Institute of International Finance said that just under 40% of private holders of the outstanding Greek debt had agreed to it.

Bondholders are also being asked to accept a lower interest rate and give Greece more time to repay them.

Late on Tuesday, Greece's finance ministry said that six of the country's largest banks would accept the deal.

Default threat

National Bank of Greece, Eurobank, Alpha, Piraeus, Hellenic Postbank and ATEbank said they accepted the deal. Together they hold about 40bn euros of the 206bn euros of affected bonds.

But five small Greek pension funds, holding about 2bn euros of debt, have said they will not accept the deal.

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

"The republic's representative noted that if [private sector involvement] is not successfully completed, the official sector will not finance Greece's economic programme and Greece will need to restructure its debt," it said on Tuesday.

Their 107bn-euro write-off - the "haircut" - together with a huge package of public sector cuts aim to reduce Greek debt from 160% of GDP to 120.5% by 2020.

Athens was first bailed out in 2010 with 109bn euros from the EU and IMF.