Private creditors to shoulder part of burden
Germany has the “clear expectation” that private creditors will join in any further financial support granted to Greece, Finance Minister Wolfgang Schaeuble’s chief spokesman said yesterday.
Euro-area governments were expected to discuss a report on Greece’s progress in adhering to the terms of its international bailout at a meeting in Vienna late yesterday, according to ministry spokesman Martin Kotthaus. They may also talk about creditor involvement in Greece in the event that any additional help is needed, he added.
“If the public sector, including taxpayers, were to agree to give the Greeks more breathing room, then I think it’s obvious to have private creditors join such a project,” Kotthaus said.
“I can’t tell you how that looks in detail because we’re waiting for the questions and answers” from the Greece inspectors’ report.
With investor expectations rising that Greece will be provided with additional money by the European Union and International Monetary Fund, Greek bonds gained for a third day yesterday, moving to the lowest point in more than two weeks.
Yields on the notes due 2013 sank 44 basis points to 24.57 percent early in the day, the least since May 17.
Earlier, German government adviser Peter Bofinger floated the idea of helping Athens by via a Brady bond-style rescue operation in which Greek government bonds are swapped against debt issued jointly by euro-region members. Joint euro-region bonds would be helpful for Greece because they would carry a very low interest rate and they would be good for banks because lenders would receive AAA-rated bonds in exchange for lower-rated paper, he told Bloomberg.