NEWS ,DAILY, 21.FEB.2005., 17.17

Comment:

Euro Ministers Reach Agreement on Second Greek Bailout Package

2012-02-21 04:30:37.144 GMT

　

(For more on the euro crisis, click on EXT4.)

By Chiara Vasarri and Svenja O’Donnell

Feb. 21 (Bloomberg) -- Euro-area finance ministers reached

agreement on a second bailout package for Greece that is vital

to staving off a default next month.

The deal includes a 53.5 percent writedown for investors inLuxembourg’s Jean-Claude Juncker, who led the

Greek bonds,

meeting, told reporters early this morning. Debt-swap bonds will he said.

have a coupon of 2 percent in 2014, rising to 3 percent in 2015-

2020 and to 4.3 percent after that,

Finance ministers haggled into the night in Brussels over

the terms of new loans to Greece and a possible contribution by

central banks, and leaned on investors to accept bigger write-

offs in a bond exchange. Ministers were discussing a Greek debt

European Central Bank President Mario Draghi called the

deal “a very good agreement.” Italian Prime Minister Mario

Monti said private bondholders agreed to take a bigger writeoff

on their Greek debt after “intense” negotiations.

The euro surged on news of a deal, rising as high as

$1.3293 and trading up 0.1 percent at $1.3262 at 5:30 a.m. in

Brussels.

European governments need to weld together the program to

give enough time for the bond exchange -- designed ultimately to

write off about 100 billion euros of Greek debt -- to go ahead

by a mid-March deadline. The target is for the swap offer to run

from Feb. 22 to March 9, so the exchange takes place in time for

Greece to escape the full 14.5 billion-euro cost of a March 20

bond redemption, German lawmakers were told last week by

government officials.

More Control

Bondholders’ response to the swap, Greece’s ability to

prolong two years of austerity, and a series of parliamentary

approvals in northern European countries gripped by an anti-

bailout mindset loom as risks to the latest salvage operation.

Frustrated with Greece’s inability to meet two years of

targets for cutting the deficit and selling off state assets,

donor countries are also insisting on more control over how

Greece spends the money. German Finance Minister Wolfgang

Schaeuble said Greece accepts the idea of paying international

aid into a special account, which would give priority to keeping

Greece solvent before releasing money for the country’s budget.

The Netherlands, one of four euro-area nations still ranked

as AAA borrowers, is pushing for monitors to set up a full-time

observation post in Athens.

For Related News and Information:

European crisis monitor: CRISIS <GO>

Sovereign credit ratings: CSDR <GO>

Credit-default swaps: GCDS <GO>

European Union news: NI EU BN <GO>

Economic indicator watch: ECOW EU <GO>

Global currencies: WCRS <GO>

--With assistance from James G. Neuger, Rebecca Christie,

Jonathan Stearns, Jeff Black, Mark Deen, Fred Pals, Angeline

Benoit and Rainer Buergin in Brussels. Editors: Matthew

Brockett, Patrick Henry

To contact the reporters on this story:

Chiara Vasarri in Brussels at cvasarri@bloomberg.net;

Svenja O’Donnell in Brussels at sodonnell@bloomberg.net.

To contact the editor responsible for this story:

Alan Crawford at +49-30-70010-6237 or acrawford6@bloomberg.net

target of 121 percent of gross domestic product by 2020.