Wall Street Journal
October 22, 2011
The euro zone is working on a deeper restructuring of Greece's debt than the one agreed in July and will appoint a senior official to negotiate with the country's private debt holders, finance ministers from the 17-nation group said Saturday.
"We are working on a July 21-plus" package for Greece, Greece Finance Minister Evangelos Venizelos told reporters on his way into a meeting of European Union finance ministers, referring to the July 21 decision by euro-zone leaders on a second Greek bailout package.
At that meeting Greece's creditors decided to go along with a proposal calling for a 21% writedown in the net asset value of Greek bonds in private hands as part of an €109 billion ($151 billion) loan.
But a report on Greece's debt outlook from the European Commission, the International Monetary Fund and the European Central Bank said that for Greece's debt situation to be sustainable--with debt to Gross Domestic Product below 110%--private creditors would have to take a 60% haircut, or Greece's official lenders would have to agree to a far larger second bailout package than the one agreed in July.
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