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article imageEurozone ministers reject private bond offer on Greek debt

By Katerina Nikolas     Jan 24, 2012 in World
Athens - Negotiations over the Greek debt crisis are set to continue after PSI offers on bond swaps were rejected by Eurozone finance ministers.
Eurozone finance ministers have rejected the offer for private sector involvement (PSI) in bond swaps necessary to write down Greek debt. An agreement has not yet been reached on the interest rate attached to long-term bonds. The interest rate on offer is too high and Athens News reported Eurogroup chairman Jean-Claude Juncker has told Greek finance minister Minister Evangelos Venizelos to continue to press for interest rates below four percent.
Unless an agreement can be reached before March 20 when the next tranche of Eurozone loans are due, Greece will default on its debts. However, some bond holders will receive a greater return if Greece does default, than if they accept lower interest rates, due to insurance coverage. Hedge funds also stand to profit if they have effectively bet on a Greek default.
Ta Nea reports that Moody's have noted a higher probability of a disorderly Greek bankruptcy, increasing the likelihood of Greece exiting the euro. European Commissioner Olli Rehn, in charge of economic and monetary affairs, nevertheless said he expects a deal to be struck between Greece and private bond holders in a matter of days, according to Ekathimerini.
More about Greek debt, Eurozone, troika, greek bonds, Greek bankruptcy
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