June 6, 2011
A majority of holders of Greek government bonds may be prepared to voluntarily roll over the country’s debt in a move that would not spark a default, analysts said, easing the way towards a second bail-out for Greece.
ING Financial Markets estimates that 55 per cent of holders of the more than €250bn ($365bn) of Greek bonds may be willing to participate in such a move.
The findings came as a European Central Bank official warned Berlin against misguided attempts to secure private sector involvement in eurozone bail-outs.
Critically, a rollover of Greek debt would only be supported by the ECB if it did not lead to a default by rating agencies, or a credit event or pay-out in credit default swaps, which insure investors against default.
The ECB fears that German attempts to force investors to extend the maturities of their bonds could prompt a default and a credit event, as such a move would involve a change in the terms of the bond agreement and losses for investors.
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