The Greek parliament will vote on a law to impose bond swap losses on investors as part of an international bailout on Thursday, a source within the Greek finance ministry has said.
Private sector holders of Greek debt will take losses of 53.5% on the nominal value of their bonds under a deal hammered out by euro zone finance ministers early this morning.
Collective Action Clauses (CACs) would impose the losses on any investors that do not take part voluntarily. A law on the CACs will be submitted to parliament later today and voted on by Thursday, the source said.
European Commission president Jose Barroso has said the €130 billion second bail-out for Greece agreed early this morning will end the threat of an uncontrolled default by its government.
Greek Prime Minister Lucas Papademos has said he is very happy with the deal reached with the European Union and the International Monetary Fund. He said it was an historic day for the Greek economy after immediate bankruptcy was avoided.
Despite last night's deal at a meeting of euro zone finance ministers in Brussels, many believe the country's debt level remains unsustainable in the long run.
As things stand, this deal will bring the debt level only down to 120% of the country's gross domestic product within eight years - and that is if everything goes according to plan.
A report presented to finance ministers warned that, in a worst-case scenario, the debt could remain at 160% of GDP by the end of the decade with further bail-outs being needed.
Read more about the hurdles Greece had to face
Officials in Brussels this morning said that growth will not return to Greece until after 2014, and unemployment will remain high - between 16% and 17% - until well into the second half of the decade.
Officials also admitted that the scale of the country's economic contraction - 17% in all since 2009 - had meant deficit reduction targets were persistently not being met during the first Greek rescue programme.
But officials stressed that Greece had managed to reduce its budget deficit by half, and that much of the second programme would focus on competitiveness, opening up closed professions and boosting exports and investment.
Under the deal, a nominal write-down of 53.5% of privately-held Greek sovereign debt should deliver €107 billion in cuts to Greece's €350 billion total debts. The Eurogroup will decide whether this exchange of devalued old bonds for new IOUs on rewritten terms has been "successful" in early March, Eurogroup chief Jean-Claude Juncker said.
Bonds issue "part of the mix" - Hayes
Minister of State Brian Hayes has described the finance ministers' meeting as very positive for the euro zone, Greece and Ireland.
Asked if flexibility shown by the European Central Bank on Greek bonds could benefit Ireland, he said that the deal - in the first instance - was about putting Greece on a sustainable path.
Asked if the Government could expect that the profit the ECB will make on Irish bonds to be given to Dublin, the Minister said such issues were "part of the mix".
Minister Hayes said there were outstanding issues for the Government to achieve, but the question was timing.
