Greece Says No Debt Restructuring Amid `Complicated' EU Talks

Greek Finance Minister George Papaconstantinou said his country isn’t considering restructuring its debt and that “difficult and complicated” discussions are under way at the European Union to reach a joint solution to the EU’s debt crisis.

“At the moment an extremely difficult and complicated discussion is taking place on how there will be a collective solution to the problem we have,” Papaconstantinou said in an interview on Mega Television in Athens. “In this discussion there are many opinions. I want to say that the government isn’t thinking along the lines of debt restructuring.”

Greek bonds fell today after Die Zeit newspaper reported that Germany is considering a plan that would allow the Mediterranean nation to buy back its own securities. The country’s 300 billion euros ($404 billion) of debt sparked a sovereign-debt crisis in Europe after Prime Minister George Papandreou revealed the budget gap was four times the EU limit. A 110 billion-euro bailout crafted by the EU and International Monetary Fund has failed to stem soaring borrowing costs for the country amid concerns of a Greek default.

The debt crisis that began in Greece now threatens Portugal and Spain. EU governments aim to find a solution by March, German Finance Minister Wolfgang Schaeuble said Jan. 13. Purchases of outstanding Greek debt, lower interest rates on rescue loans, aid for Portugal and guarantees against excessive debt are all being considered, four people with direct knowledge of the talks told Bloomberg News last week.

‘Current Instability’

“It is clear there will be decisions in the next month because it’s obvious we can’t go much longer with the current instability,” Papaconstantinou said. “Let’s not forget after all that the European Central Bank is intervening and keeping the system balanced. It’s a transitional period but we must conclude on a collective agreement.”

Both German and Greek finance ministries denied the report in the German weekly Die Zeit, which said Greece would be allowed to repurchase bonds with funds from the European Financial Stability Facility made available “with favorable interest conditions”.

Papaconstantinou said he received confirmation at this week’s meeting of European finance ministers of plans to extend the maturities of the loans to the EU and IMF. He said a discussion on lowering interest rates would work in the interests of Greece and Ireland, which became the second EU nation to seek EU and IMF support.

Greece wants to revise maturities to avoid a “hump” in repayments in 2014 and 2015 and bring them into line with those for Ireland, which received an 85 billion-euro bailout late last year.

Interest Rates

“A discussion has opened on the cost of borrowing which is very important for us, meaning lower interest rates,” he said.

Papaconstantinou said only he and Papandreou were authorized to talk about the country’s debt. The government yesterday denied being in talks to restructure its debt with private creditors after two government ministers spoke out in favor of the option.

The Greek 10-year bond yield was seven basis points higher at 11.36 percent at 1:09 p.m. in London. It earlier rose as high as 11.66 percent. The extra yield or spread investors demanded to hold Greek bonds instead of similar-maturity German bunds widened 12 basis points to 8.45 percentage points, according to Bloomberg generic data.

To contact the reporter on this story: Natalie Weeks in Athens nweeks2@bloomberg.net. Maria Petrakis in Athens at mpetrakis@bloomberg.net.

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net.

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