IMF: Greece Will Need Third Bailout in Debt Writedowns

Last week Greece was granted a massive bailout for the second time, after winning hard-fought concessions from its private debt holders and pushing through additional unpopular austerity measures at the behest of its rescuers. This week the International Monetary Fund said it expected Greece to need additional funding or more debt restructuring—in effect, a third bailout.

Bloomberg reported that the country’s credit ratings and bonds are factoring in the need for additional financial assistance, with both analysts and investors believing that more losses will be imposed on Greece’s international creditors.

Wariness about additional losses is making Greece’s debt a hard sell—and dragging down euro area debt in general. PIMCO said it continued to be “cautious” on sovereign debt from euro zone countries, since the risk of Greece departing the currency bloc persists.

“It’s still a very steep mountain to climb,” Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group in London, was quoted as saying. He added that the restructuring deal “doesn’t do anything to put Greece on a sustainable path. A third bailout will become necessary.”