Eurozone finance ministers reject Greek debt
Telegraph ^ | 1/24/2012 | Bruno
Waterfield, Angela Monaghan
to restructure Greece's debt hit a new impasse after
eurozone finance ministers rejected an offer from private
bondholders because the cost of sweeteners on new Greek
bonds were too high.
blow came after a day in which European markets had risen
on hopes that attempts to resolve the latest phase of the
Greek debt crisis would be successful.
ministers have demanded that negotiations between the
Greek government and Institute of International Finance
(IIF) reach agreement on a lower average coupon, or
interest rate, on new Greek bonds issued in return for a
haircut on existing debt held by private investors.
ministers have sent the offer back for negotiations," said
an official last night. "The ministers want a lower coupon
than presented in the offer."
offer, negotiated during tense talks that rattled markets
last week, assumed an average coupon on new Greek bonds of
bonds, likely to have maturity of 30 years, would replace
existing Greek debt as sweetener for writing down existing
Greek bonds owned by banks and private investors.
International Monetary Fund (IMF) has insisted that the
coupon rate must not exceed 3.5pc on average if the deal
is to reduce the currently unsustainable burden of Greek
debt to manageable levels.
coupon is 4pc then the cost for Germany and other eurozone
countries of a second Greek bailout in March will rise
beyond a €30bn figure earmarked for sweetening a debt
write down for the private sector.
Juncker, head of the eurozone finance ministers' group,
last night confirmed that the group wants a rate below 4pc
and insisted that rates must be on average 3.5pc or below
officials have insisted that there are no plans to
increase the €130bn of