24/7 Wall St.
May 2, 2011
The Greek government has begun to float the trial balloon of a lengthened period over which it repays its 110 billion euro bailout loans. Greek Finance Minister Georges Papaconstantinou once again ruled out a default or restructuring of his nation’s paper. He claims it would hurt the debtholders as much as it would hurt Greece, which is probably true. A number of European banks are believed to hold large holdings of Greek sovereign loans.
What the Greeks have not admitted is that default could be broadly interpreted to include a extension of the time over which it covers its EU and IMF obligations. Creditors who expect a fixed sum of money in the future will not receive that on the current repayment schedule. Greece would argue that its debt will be repaid in full, but a debt rescheduled is a debt in default, particularly if those due money have no say in the matter.
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