Seeking Alpha
June 1, 2011
Tuesday saw the EU's Jean-Claude Juncker strike down the potential for a total restructuring of Greek debt and note that further aid to Greece would be negotiated by the end of June. With this statement, it became clear that interested parties in Greece and the troubled PIIGS would pursue the bailout route rather than debt restructuring. Or at least that is the precedent that is being set.
In a recent article I noted that there were essentially two long-term solutions for Greece: (1) restructuring of domestic debt to a manageable level or (2) that the IMF, ECB and EU, either piecemeal or through a coordinated effort, bail out private debtholders to the point of eliminating rating agency concerns for Greek solvency and allowing Greece to re-enter credit markets. While there is still the possibility of an additional "soft" restructuring by way of a voluntary term extension on privately held Greek bonds, Juncker's words marked the continued move down the path of a complete bailout.
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