Rat­ings com­pa­nies need to sup­port Greek debt plan

Kathimerini English - - Business & Finance -

A Greek debt rollover would only work if Euro­pean Union of­fi­cials se­cure a pledge by rat­ings com­pa­nies not to con­sider it a de­fault, said Erik Ber­glof, chief econ­o­mist at the Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment. Pol­i­cy­mak­ers are con­sid­er­ing rollovers as part of a new Greek res­cue pack­age as the coun­try strug­gles to re­duce the euro re­gion’s largest debt bur­den. One model may em­u­late the so-called Vi­enna Ini­tia­tive of 2009, when the EBRD led ef­forts to per­suade banks to roll over fund­ing for their units in East­ern Europe and in­ject fresh cap­i­tal if needed. Credit an­a­lysts at Moody’s In­vestors Ser­vice, Stan- dard & Poor’s and Fitch Rat­ings have in­di­cated in the past week that a debt rollover, even if vol­un­tary, may be seen as a de­fault. Fitch said on June 6 that a rollover to avoid a pos­si­ble de­fault or where bond­hold­ers re­ceived new debt that was “ma­te­ri­ally less ad­van­ta­geous” would prompt a de­fault rat­ing. “I know that rat­ing agen­cies are look­ing at this in a re­ally crit­i­cal man­ner,” Ber­glof said yes­ter­day in an in­ter­view with Maryam Ne­mazee on Bloomberg Tele­vi­sion’s “The Pulse.” “What­ever so­lu­tion is found, it needs to be a pre­con­di­tion that this isn’t re­garded by them as a de­fault sit­u­a­tion.” The pro­posal un­der dis­cus­sion may give in­vestors pre­ferred sta­tus, higher coupon pay­ments or col­lat­eral, said two Euro­pean Union of­fi­cials fa­mil­iar with the sit­u­a­tion. EU lead­ers are sched­uled to meet June 23-24 in Brus­sels to ap­prove a plan. Greece re­mains mired in a re­ces­sion and needs fur­ther aid to cut debt a year af­ter se­cur­ing a 110-bil­lion-euro ($161 bil­lion) bailout. In­vestors will have a vol­un­tary role in help­ing the coun­try avert a de­fault un­der a new plan, Lux­em­bourg Prime Min­is­ter Jean-Claude Juncker said last week. (Bloomberg) pe­tite for deals in the re­ces­sion-hit coun­try. Kasteli is the first ma­jor in­fra­struc­ture pro­ject Greece’s So­cial­ist gov­ern­ment has tack­led since win­ning power in Oc­to­ber 2009 and one of a se­ries of big in­vest­ments the coun­try needs to kick­start growth and exit its debt cri­sis. The dead­line for the ten­der, which ex­pired on Tues­day, is be­ing ex­tended to Oc­to­ber 18 ac­cord­ing to a de­ci­sion by the In­fra­struc­ture Min­istry, pub­lished on a Greek gov­ern­ment web­site. The min­istry said in­ter­ested par­ties have ex­pressed con­cerns over the size of the pro­ject and its vi­a­bil­ity and that it had to post­pone the ten­der to ad­dress their re­quests. The ini­tial dead­line for open­ing bids and nam­ing a win­ner had been set at Fe­bru­ary 9, 2010. Greece is one of Europe’s top tourist des­ti­na­tions and Kasteli will be­come its sec­ond-big­gest air­port af­ter Athens in terms of for­eign traf­fic. It will re­place Crete’s out­dated Irak­lio air­port, which is burst­ing un­der the strain of han­dling nearly 2 mil­lion tourists a year. Ac­cord­ing to the doc­u­ment, some of the con­struc­tion firms which have ex­pressed in­ter­est are France’s Vinci, the world’s largest con­struc­tion group, and Bouygues, Greece’s El­lak­tor, J&P Avax and Archi­rodon. (Reuters) econ­omy gained 1.7 per­cent, the na­tional sta­tis­tics in­sti­tute said. Ro­ma­nia had posted timid growth of 0.1 per­cent in the last quar­ter of 2010, end­ing two years of se­vere re­ces­sion. Growth was gen­er­ated by a 10.1-per­cent rise in in­dus­trial out­put. (AFP)

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