Friday, October 21, 2011

EU eyes 50-60 percent Greek haircut for sustainable debt

Reuters
October 21, 2011

Private investors would have to forgive 60 percent of what Greece owes them to make its debt sustainable by 2020 and for a euro zone loan package to stay at the 109 billion euros agreed in July, a report by international lenders said.

The confidential report, discussed by euro zone finance ministers on Friday, will form the basis for talks with private investors on what losses they should accept on their Greek portfolios in the second emergency financing plan for Greece.

Private investors have already offered to accept a net present value loss on their Greek portfolios of 21 percent under a deal struck with euro zone leaders in July.

But since then Greece turned out to be in a deeper-than-expected recession, it is behind on its structural reforms, privatization and fiscal goals and market conditions have deteriorated.

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