Debt swap a 'historic' chance, but Greek crisis smolders on

(PARIS) - Private investor acceptance of a Greek debt swap is a historic chance to stabilise Greece, officials said on Friday but analysts warned that this is not the end of the Greek drama.

The head of Eurogroup eurozone finance ministers Jean-Claude Juncker said the "elements were now in place" to proceed with final approval for a second bailout for Greece.

"I welcome the significant progress achieved in the preparation of the second Greek adjustment programme," Juncker said.

German Finance Minister Wolfgang Schaeuble said: "We are not out of the woods but we have taken a big important step."

His ministry said that Greece had been handed a "historic chance" after Athens announced 83.5 percent of its private creditors had tendered bonds for exchange, opening the way for an urgent second bailout to save the country.

European Union President Herman Van Rompuy commented on Twitter: "Restructuring of Greek debt: the turning point in the crisis has been reached. We are heading for calmer waters."

French President Nicolas Sarkozy said that the EU was finally emerging from its financial crisis.

"I want to tell the French that the page of the financial crisis is turning, that we can today tackle the economic crisis," he said on his re-election campaign trail in the southern city of Nice.

EU Economics Affairs Commissioner Olli Rehn said he was "very satisfied" with the participation by private investors in the voluntary debt swap adding that the result was a "decisive contribution to financial stability in the euro area as a whole."

International Monetary Fund head Christine Lagarde, before the official take-up rate was announced, said the risk of crisis in the eurozone has been "removed" for now.

Lagarde said that the "real risk of a crisis, of an acute crisis, has been, for the moment, removed."

She later called the deal "an important step that will dramatically reduce Greece's medium-term financing needs and contribute to debt sustainability."

Deutsche Bank head Josef Ackermann, who chairs the Institute of International Finance which negotiated the deal on behalf of major private creditors, said the swap was a "very strong and positive result".

It provided a "major opportunity for Greece to move ahead with its economic reform programme" and strengthened the eurozone's "ability to create an economic environment of stability and growth", Ackermann said.

The IIF's managing director Charles Dallara added that the voluntary exchange "reduces the risks of contagion in the markets, while it enables Greece to build on the strengths of the reform efforts themselves."

German banking lobby president Michael Kemmer said the swap was a "ray of hope, not the end of the crisis."

"Athens must not let up in its efforts," he said.

Analysts also expressed some relief at the successful exchange, but warned that it still leaves Greek government debt at an unsustainably high level.

"There are clearly mixed sentiments among investors," said a note from analysts at Moneycorp.

"On the plus side, the biggest ever sovereign debt restructuring has gone through without blowing up in everyone's face and Greece has been let off 100 billion (euros, $132 billion) of its obligations.

"On the minus side, nobody is under any illusion that this is the end of the saga," Moneycorp concluded.

Greece's economy was still in a steep contraction and "Athens likely will need a third bailout", said Paul Christopher of Wells Fargo Advisors while others wondered which eurozone economies could be under pressure next.

Barclays Capital said "investors remain nervous that Portugal may be next" even with the Greek restructuring of private-sector debt "well under way".

Fawad Razaqzada, an analyst at traders GFT Markets said "investors will also be wondering if Ireland, Portugal and Spain will soon be requesting a similar debt relief deal."