Friday, January 21, 2011

EU struggles to keep lid on Greek debt buyback talk

Reuters/Yahoo News
January 20, 2011

Greece and euro zone paymaster Germany tried to fend off talk on Thursday that Athens needed help with debt repayments via a buyback with European funding that could face stiff opposition in national parliaments.

A German paper said euro zone nations were mulling a plan to enable Greece and Ireland to write off some of their debt burden using the European Financial Stability Facility, set up after the Greek bailout as a safety net for others who hit trouble.

The Financial Times Deutschland said euro zone finance ministers, who met on Monday, discussed a plan for the bloc's rescue fund to buy bonds from these states or give them favorable loans for repurchasing debt.

It was not clear under the plan whether bondholders would be paid the face value of the debt or not, leaving open the crucial question of whether investors faced a "haircut."


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