Sarkozy wants bur­den to be shared

French pres­i­dent calls for ‘for­mula’ in­volv­ing in­vestors; oth­ers see ECB fears as be­ing un­founded

Kathimerini English - - Business & Finance -

French Pres­i­dent Ni­co­las Sarkozy said yes­ter­day that bond­hold­ers need to share the bur­den of solv­ing Greece’s fis­cal woes. His com­ments fol­lowed those made by a Ger­man of­fi­cial on the is­sue of re­struc­tur­ing Greek debt.

Sarkozy called for a “for­mula” in­volv­ing in­vestors, adding to talk that Europe might en­gi­neer an ex­ten­sion of Greece’s debt re­pay­ment sched­ule or press bond­hold­ers to buy new bonds as old ones ma­ture.

“Re­struc­tur­ing is a poorly used word,” the French pres­i­dent told re­porters af­ter a Group of Eight sum­mit in Deauville, France. “If it means that we can think of ways for the pri­vate sec­tor, pri­vate op­er­a­tors, to take on a share of the bur­den, it’s not re­struc­tur­ing at all; then there are for­mu­las, there is no prob­lem, and we should then con­verge in that direc­tion.”

Sad­dled with Europe’s heav­i­est debt load, Greece is seek­ing ad­di­tional loans af­ter last year’s 110-bil­lion-euro Euro­pean-led pack­age failed to dig it out of its fis­cal hole. The Euro­pean Cen­tral Bank has led the charge against a re­struc­tur­ing, warn­ing of a domino ef­fect in Euro­pean mar­kets.

Yes­ter­day, a lead­ing mem­ber of Ger­man Chan­cel­lor An­gela Merkel’s party said ECB fears that rolling over the ma­tu­ri­ties of Greek debt could spark tur­moil in the euro re­gion may be un­founded.

Michael Meis­ter, the Chris­tian Demo­cratic fi­nance pol­icy spokesman in par­lia­ment, said Greece’s cred­i­tors may ac­cept an ex­ten­sion of bond ma­tu­ri­ties if the Greek gov­ern­ment adopts a more ag­gres­sive ap­proach to cut­ting debt.

“If Greece takes steps that sig­nal to cap­i­tal mar­kets that some­thing’s be­ing done to lessen the risk for cap­i­tal mar­kets and cred­i­tors, then we’re not talk­ing about co­er­cive mea­sures af­fect­ing cred­i­tors, we’re talk­ing about joint con­tri­bu­tions to­ward tak­ing some of the risk out of the mar­ket,” Meis­ter told Bloomberg. His com­ments un­der­line the view of Ger­many, the euro re­gion’s big­gest con­trib­u­tor to Greece’s bailout last year, that the Greek gov­ern­ment has un­tapped po­ten­tial to cut its debt and that Merkel won’t be pressed into rul­ing out op­tions ahead of a Greek as­set sales drive.

Greek 10-year bonds are trad­ing at less than 55 cents on the euro, a sign of in­vestors’ di­min­ish­ing ex­pec­ta­tions of be­ing re­paid in full.

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