Wall Street Journal
June 4, 2011
Euro-zone governments have reached a tentative deal on a new financing package for Greece that will seek roughly €30 billion in contributions from the country's private-sector creditors, senior euro-zone officials said Saturday.
The 17 euro-zone governments will ask Greece's creditors to exchange their soon-to-mature debt for debt with a longer maturity, a process that could begin as early as July after finance ministers approve the new Greek aid package at their meeting June 20, officials said.
The governments will give Greece new lending, to be provided by the European Financial Stability Facility, the euro zone's sovereign rescue fund, officials said. But that financing will likely come with the condition that the banks, pensions funds and other investors holding Greek bonds agree to exchange them for new bonds with a longer maturity to help fill Greece's financing gap over the next three years, they said.
"Private investors would have a strong incentive to participate, because if they don't, there will be a default," said one official.
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