The move to involve German chancellor, Angela Merkel, and French president, Nicolas Sarkozy, comes after restructuring talks with official investors broke down on Friday, raising concerns that Greece was moving closer to becoming the first developed country in nearly 60 years to default on its debt. In a sign of urgency, Guido Westerwelle, German foreign minister, flew to Athens for talks about the so-called private sector involvement (PSI) negotiations with Greek premier, Lucas Papademos.
Much of the agreement had been in place for several weeks, but a final deal had stalled over the coupon payment for new 30-year bonds to be issued by the Greek state. Greek debt managers had agreed with bondholders on a coupon just below 5 per cent, but some governments last week proposed a much lower interest rate. Germany has proposed a 2-3 per cent coupon that would increase bondholders’ losses from 60 per cent to more than 80 per cent in net present value terms.
The interest rate and other terms “must be attractive enough to ensure voluntary participation and the maximum number of interested parties”, said one person close to French bondholders.
Full article (FT subscription required)
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article