Wall Street Journal
July 21, 2011
A new bailout package for Greece will likely include measures to cut the country's debt, lower interest rates and reduce the participation of private investors holding Greek debt, as part of a deal reached by German Chancellor Angela Merkel and French President Nicolas Sarkozy, a senior euro-zone official said Thursday.
The official, who will participate in preparatory talks ahead of a summit by European leaders on Thursday, said the new bailout "is expected to be similar in size as the first one." Greece got a €110 billion ($156.38 billion) loan from its European Union partners and the International Monetary Fund last year.
The currently favored plan, following last night's Franco-German consensus, is to invite investors to exchange their Greek bonds for new, 30-year bonds bearing low interest and credit enhancement, officials close to the talks say. The idea of a special tax on banks has been dropped, these people say.
"The Merkel-Sarkozy agreement will be the basis of the final agreement. Specifics will be discussed by senior advisers this morning and by the leaders afterwards. As it's always the case in the euro-zone all countries must be heard and things may change. But I believe we'll have a solid agreement today," the official said without elaborating.
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