Euro zone finance ministers sealed a deal for a massive new bailout for Greece in the early hours of Tuesday, several sources said.

“We have the essentials of the deal,” a European Union official said, indicating that it covered both a write-down of Greek sovereign debt held by private creditors and a related package of guarantees and loans being put up by euro zone governments.

The euro immediately jumped against the dollar in Asian trading.

The write-down of Greek sovereign debt accepted by private creditors was to be for 53.5 per cent of paper value, 3.5 per cent more than the terms earlier agreed.

In October, leaders said a 50-per cent “haircut” would chop €100 billion off Greece’s 350-billion total debts.

Finance ministers also gave their green light to €130 billion ($171 billion) in loans, in exchange for strict surveillance of the Athens government over coming years.

The deal, in doubt during weeks of tough negotiations, finally came after 12 hours of tense talks in Brussels.

These saw Greek Prime Minister Mr Lucas Papademos — a former European Central Bank No 2 — act as go-between for ministers with negotiators for private creditors.

The agreement will bring government debt in Athens down to 120.5 per cent of gross domestic product (GDP) by 2020, a euro zone governmental source said.

This is just a fraction above the 120 per cent target set by the European Union and the International Monetary Fund, and means a €5.5-billion gap in funding was found to bring it down from an estimated 129 per cent, according to the latest analysis by international creditors.

A deal became urgent because Greece faces 14.5 billion in bond repayments on March 20. Failure to meet this could have been seen as bankruptcy.

The euro rose to $1.3291 from $1.3185 immediately after the news from Brussels. The euro also rose to ¥105.75 after the deal from ¥105.43 in earlier trade.

National eurozone central banks earlier agreed to engage in their own write-down of Greek bonds.

Ministers were still working on a final statement to be issued at a press conference that would also cover plans for the EU and the IMF to install teams of officials in Athens to supervise Greek government management of revenues and expenditure.

This was to include the setting up of a blocked account that would ensure euro zone governments could be sure they would get their money back, with Greece deep in a fifth year of recession and massive cuts demanded on public sector wages and pensions.

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