Financial Times
June 28, 2011
European financial institutions have sketched out a plan to extend a substantial portion of Greece’s maturing sovereign debt for up to 30 years, as creditors coalesced around a French-led replica of the Brady bonds used to bail out Latin America 22 years ago.
Close to 50 people, many from the French and German banking and insurance industries, attended a meeting in Rome to discuss the proposal from French banks, centred on a voluntary agreement to extend half of the debt maturing over the coming three years into new 30-year bonds. BNP is the biggest single holder of Greek sovereign debt, with about €5bn of exposure.
The meeting – chaired by Vittorio Grilli, head of Italy’s Treasury, in his capacity as head of the EU’s Economic and Finance Committee – comes at a crucial juncture for Greece, with the country’s parliament set on Wednesday to vote on a new round of controversial austerity measures.
Those measures have been agreed with international lenders as a condition of a €12bn aid payment that Athens needs to avoid a sovereign default next month. European officials have begun discussing contingency plans in case the Greek parliament fails to approve the package amid fears that a failure in Athens could endanger the single currency.
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