Greek Debt Writedown May Top 60%

A debt crisis summit meeting of European leaders scheduled for October 18 was pushed back to October 23 amid a disagreement about the amount of Greek debt to be written down. While the original plan in July called for a 21% reduction, now there is talk of a 50-60% writedown instead—and Germany is calling for even larger losses.

Bloomberg reported Tuesday that Jean-Claude Juncker, prime minister of Luxembourg, said in an interview that discussions on Greek sovereign debt writedowns could result in amounts considerably more than anticipated; asked about 50-60% loss on holdings, he said. “we’re talking about even more,” without providing additional details. Guy Schuller, a spokesman for Juncker, said later that Juncker meant euro-area officials were discussing investor losses on their Greek holdings exceeding 21%.

Belgian Prime Minister Yves Leterme was quoted saying, “It is a very sensitive item. You can’t at every European Council change the percentages and bring supplementary problems to banks.” Nevertheless, it would appear that there is a strong possibility that the July agreement will be renegotiated. Leterme said that an agreement to recapitalize banks was necessary before such an action is taken.