Those institutions and investors holding large quantities of Greek bonds may be in for bigger losses than an originally agreed-upon deal provided for, according to hints from European finance ministers who met Monday to discuss Europe’s ongoing debt crisis.
That meeting was originally supposed to authorize payout of the second round of loans in Greece’s bailout program, but that decision, which had been put off till their Oct. 13 meeting, has been postponed again. French banks, meanwhile, are resisting any additional writedowns.
Bloomberg reported that finance ministers are considering reconfiguring an arrangement reached in July that called for a 21% loss by private bondholders on Greek debt. The investors were to have contributed some 50 billion euros ($66 billion) to a 159 billion-euro rescue, by means of strategies that included debt rollovers and exchanges. While it is still the plan for bondholders to contribute, the amount may have changed in the face of the escalating crisis as the euro zone tries to hold the joint currency together and avoid the possibility of defaults by Spain and Italy, which are too big for the current rescue fund to save.