If the deal holds and works, it will help prevent a potential shock to the world banking system. But it doesn't resolve the weakening economic conditions in Greece and other European nations as they rein in spending to get their debts under control.
"the Greece debt issues will remain a source of uncertainty and might dampen the risk mood ahead of the EU summit today
Under the agreement, investors holding 206 billion euros ($272 billion) in Greek bonds would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate.
The deal would reduce Greece's annual interest expense from about 10 billion euros to about 4 billion euros. When the bonds mature, Greece would have to pay its bondholders only 103 billion euro.
It is unclear how investors who buy and sell the bonds of other debt-burdened countries, such as Italy, Spain and Portugal, will react. If they drive up borrowing costs for those countries, the debt crisis could get worse.
Private investors hold two-thirds of Greece's debt, which is equal to an unsustainable 160 percent of its annual economic output. By restructuring the debt, Greece hopes to make it a more manageable 120 percent by decade's end.
Asian stock markets fell Monday jan 30 2012 , with slower-than-expected growth in the U.S. and uncertainty about a tentative deal to resolve Greece's debt crisis weighing on investor sentiment
Japan's Nikkei 225 index fell 0.7 percent to 8,781.92. South Korea's Kospi was 0.7 percent lower at 1,951.23 and Hong Kong's Hang Seng dropped 0.5 percent to 10,394.33. Australia's S&P/ASX 200 lost 0.3 percent at 4,274.70.
Benchmarks in Singapore and the Philippines also fell. Shares in mainland China were mixed after being closed for a week for Chinese New Year holidays. Taiwan and New Zealand rose.
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