Wednesday, June 1, 2011

Sweeteners for Greek Debt Extension

European officials preparing Greece’s second bailout in two years may offer bondholders incentives to roll over maturing debt without triggering a credit-rating downgrade that would roil Europe’s banking system, two people with knowledge of the talks said.
Investors may be given preferred status, higher coupon payments or collateral as inducements to buy bonds replacing Greek debt maturing between 2012 and 2014, said the people, who declined to be identified because the talks are in progress.
European leaders are trying to prevent the euro area’s first sovereign default. Last year’s 110 billion-euro ($159 billion) rescue failed to prevent an investor exodus from Greece, saddled with Europe’s highest debt load amid a three- year economic slump. The upgraded package would share costs with investors while skirting a technical default, the people said.