Bloomberg News

Bondholders Should Supply 30% of Greek Aid, De Jager Says

June 14, 2011

(Updates with comment from minister in second paragraph.)

June 14 (Bloomberg) -- Private-sector investors should contribute at least 30 percent of possible additional refinancing aid for Greece, Dutch Finance Minister Jan Kees de Jager said.

“It’s important that the private sector, which benefits much from this program, makes a contribution” of more than 30 percent, he told parliament in The Hague today. “It depends on the financing gap, so I can’t mention any amounts.”

While the European Central Bank has said it could accept a plan in which creditors voluntarily agree to buy Greek bonds to replace maturing debt, the monetary policy makers have warned against a German proposal that maturities on Greek debt be extended for seven years, an outcome that rating companies said would be considered a default.

“There are ways to make it attractive for private parties to participate voluntarily in extending debt,” De Jager said before a meeting with European counterparts in Brussels. “For instance new bonds, which replace old ones, can be given new special rights the old bonds lack.”

European finance chiefs began the final stage of hammering out a Greek rescue to prevent the euro area’s first sovereign default after the country was slapped with the world’s lowest credit rating by Standard & Poor’s. German Finance Minister Wolfgang Schaeuble said there won’t be a decision today on an aid package for Greece.

“We need to make it as voluntary as possible to prevent triggering scenarios that cost more and make financial markets lose all confidence in the euro zone,” De Jager said.

--Editors: Jennifer M. Freedman, Eddie Buckle

To contact the reporters on this story: Jurjen van de Pol in Amsterdam at jvandepol@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net.

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net.


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