Greece has cleared a major hurdle in its race to avoid bankruptcy by persuading the vast majority of its private creditors to sign up to the biggest national debt write down in history, paving the way for a second bailout.

Following weeks of intense discussions, the Greek government said on Friday that 83.5 per cent of private investors holding its government bonds were participating in a bond swap. Of the investors holding the €177 billion ($234 billion) in bonds governed by Greek law, 85.8 per cent joined.

The investors will exchange their bonds with new ones worth 53.5 per cent less in face value and easier repayment terms for Greece. The swap will shift the bulk of the remaining debt into public hands.