Bloomberg News

Juncker Says Greek Bondholders May Face 60% Loss in Aid Package

October 24, 2011

(For more on Europe’s debt crisis, see EXT4.)

Oct. 24 (Bloomberg) -- Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said talks on private sector involvement in a second aid package for Greece are focusing on losses of as much as 60 percent for bondholders.

“Private investors, the banks, the private sector, have to participate in quite a substantial way to ensure that Greece’s debt burden becomes bearable in the long term,” Juncker said Oct. 22 on RTL Luxembourg Television. “We said in July that it had to be 21 percent. This will clearly not be enough. It has to be considerably higher. About 50 percent, 60 percent is what’s being talked about.”

Juncker said private-sector participation in the package should be voluntary. “If we impose it, there would be what is called a credit event and then everything falls apart.”

If banks don’t respond in talks, however, “we might have to move toward a compulsory solution,” Juncker said. “I rule this out, I don’t want this, because it would have very serious consequences, and not only for Greece, which would be bankrupt. It would also have serious repercussions for the rest of the euro area. But we can’t let the banks lead us by the nose.”

--Editor: Patrick G. Henry

To contact the reporter on this story: Stephanie Bodoni in Brussels at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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