EU Said to Consider Sweeteners to Encourage Greek Debt Extension
2011-06-01 10:20:35.121 GMT
By James G. Neuger
June 1 (Bloomberg) -- Greece’s next aid package may include
incentives for bondholders to roll over maturing debt without
triggering a credit-rating downgrade that would roil Europe’s
banking system, two people with knowledge of the talks said.
Investors may be offered preferred status, higher coupon
payments or collateral as inducements to buy bonds replacing
Greek debt maturing between 2012 and 2014, said the people, who
declined to be identified because the talks are in progress.
The sweeteners would be part of a revised aid package, to
be decided by the end of June, amounting to a voluntary
extension of Greece’s debt maturities that aims to skirt the
technical definition of default, the people said.
European officials are trying to prevent the euro region’s
first sovereign default as investors dump Greek bonds on
concern the government in Athens won’t be able to meet its bond
obligations. Greece’s financing needs beyond last year’s 110
billion-euro ($159 billion) package may be known tonight or
tomorrow, as European and International Monetary Fund officials
complete work on an assessment of Greece’s economy.
Senior aides to European finance ministers are discussing
elements of the package in Vienna today. The ministers
themselves may meet as early as next week, with final decisions
due at a summit of government leaders on June 23-24.
So-called negative incentives are also under consideration,
such as cutting off old Greek bonds from eligibility for use as
collateral with the European Central Bank, the people said.
Policymakers are also looking at other ways of encouraging
bondholders to maintain exposure to Greece, along the lines of
the 2009 “Vienna Initiative” that leaned on creditors to roll
over expiring bonds, the people said.
2011-06-01 10:20:35.121 GMT
By James G. Neuger
June 1 (Bloomberg) -- Greece’s next aid package may include
incentives for bondholders to roll over maturing debt without
triggering a credit-rating downgrade that would roil Europe’s
banking system, two people with knowledge of the talks said.
Investors may be offered preferred status, higher coupon
payments or collateral as inducements to buy bonds replacing
Greek debt maturing between 2012 and 2014, said the people, who
declined to be identified because the talks are in progress.
The sweeteners would be part of a revised aid package, to
be decided by the end of June, amounting to a voluntary
extension of Greece’s debt maturities that aims to skirt the
technical definition of default, the people said.
European officials are trying to prevent the euro region’s
first sovereign default as investors dump Greek bonds on
concern the government in Athens won’t be able to meet its bond
obligations. Greece’s financing needs beyond last year’s 110
billion-euro ($159 billion) package may be known tonight or
tomorrow, as European and International Monetary Fund officials
complete work on an assessment of Greece’s economy.
Senior aides to European finance ministers are discussing
elements of the package in Vienna today. The ministers
themselves may meet as early as next week, with final decisions
due at a summit of government leaders on June 23-24.
So-called negative incentives are also under consideration,
such as cutting off old Greek bonds from eligibility for use as
collateral with the European Central Bank, the people said.
Policymakers are also looking at other ways of encouraging
bondholders to maintain exposure to Greece, along the lines of
the 2009 “Vienna Initiative” that leaned on creditors to roll
over expiring bonds, the people said.
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