Greek Restructuring Seen More Likely

Wall Street Journal
April 14, 2011

The majority of euro-zone countries believe a restructuring of Greek debt is inevitable and could happen next year, two senior euro-zone government officials familiar with the matter said Thursday.

"There is widespread belief inside the euro zone that a Greek debt restructuring will happen sometime next year. The European Central Bank and the International Monetary Fund believe the same," said one of the officials, who is directly involved in talks with the European Union and the IMF.

The two government officials said these views have become known in recent talks between the EU, the IMF and Greek government.

The cost on Thursday of insuring Greek sovereign debt against non-payment using derivatives implied a 65% chance of default over the next five years, or 22% sometime in the next year, according to credit default swaps pricing service Markit.

At global finance meetings getting underway in Washington, IMF chief Dominique Strauss-Kahn and European Union economics commissioner Olli Rehn both said Greece's program will succeed without restructuring.

"Greece will make it, provided two things," Mr. Strauss-Kahn said at an IMF press briefing. "If it is correctly addressed by the Greeks on one hand and the euro zone on the other hand, I see no reason why it won't work."

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