FINANCIAL TIMES: European leaders have agreed a new €109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing a target of a further €37bn.
The deal was a political victory for Angela Merkel, Germany’s chancellor, but one that will almost certainly lead to the first default on eurozone bonds since the creation of the single currency…
Because the bondholder programmes amount to a 21 per cent reduction in the bonds’ value, they are widely expected to trigger a selective default, a move long resisted by Jean-Claude Trichet, head of the European Central Bank, and Nicolas Sarkozy, the French president, who fear the breach could prompt investor panic… (more)
EDITOR: This not so much relief for Greece as relief for the European (and some American) bankers. It is good to see that finally the lenders who accepted risks to receive a higher rate of interest are being made to absorb some of the losses.
