Euro-area governments closed in on a deal to unlock a 130 billion-euro ($171 billion) aid package for Greece, seeking to avert the region’s first sovereign default.
Germany, the biggest country contributor to euro-area rescues, signaled that finance ministers may be ready to back Greece’s second bailout in two years when they meet Feb. 20 in Brussels. After a week of wrangling among euro-area officials, Chancellor Angela Merkel’s government indicated it aims to avoid splitting the timetable of the aid and a writedown of Greek debt to private bondholders and agree to the deal as one package.
Keeping the bond swap on track may hinge on the ECB. The bank is swapping its Greek bonds for new ones to ensure it isn’t forced to take losses in any debt restructuring, three euro-area officials said on Feb. 16. The move may be completed by Feb. 20, the officials said.
That could pave the way for a private-sector bond swap that aims to slice about 100 billion euros off Greece’s debt alongside the second bailout. More controversial is a proposal for national central banks to take part in the private exchange by accepting losses on Greek bonds in their investment portfolios.