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Greece confident over debt deal

A deadline has passed for private investors to participate in a major Greek debt reduction deal, with government officials and world markets appearing confident of high participation.

A senior government official said shortly before the 10pm local time (8pm GMT) deadline that no extension was being planned.

The landmark agreement is aimed at slashing the country's national debt by 107 billion euro (£90 billion), with private bond holders accepting a face-value loss of 53.5%, in exchange for new bonds with more favourable repayment terms.

Initial results of participation in the exchange are due to be announced early on Friday.

The swap is a critical part of the country's second international bailout. If too few investors agree and it fails, the crisis-hit country will likely default on its debt in less than two weeks when a big bond repayment is due, prompting renewed turmoil in financial markets and knocking confidence in the global economy.

A government official said the take-up on the offer had already topped 75%.

Charles Dallara, head of the Institute of International Finance, or IIF, which has been negotiating on behalf of large private creditors in the deal, said he believed the participation would likely be "very, very high" and that he was "quite optimistic" the deal would come together.

Athens has said it needs 90% participation for the deal to be successful and markets have been optimistic that Greece will muster enough support. The Athens stock exchange closed up 3.1%, while the Stoxx 50 of leading European shares rose 0.9%.

The bond swap is a radical attempt to pull Greece out of its debt spiral and put its shrinking economy back on the path to recovery. The hope is that by slashing the overall debt, the country, which is in a fifth year of recession, can gradually return to growth and eventually repay the remaining money it owes.

The complex bond swap, known as the Private Sector Involvement, or PSI, is critical for Greece to secure its second bailout - a 130 billion euro (£109 billion) package of rescue loans from other eurozone countries and the International Monetary Fund.

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