Today’s talks are part of European efforts to get creditors to share the burden of a second Greek bailout a year after a 110 billion-euro ($158 billion) package failed to stop the debt crisis from spreading.
The meeting is focusing on involvement of private investors in a new Greek package, said the official, who declined to be named because of internal policy. The discussions are organized by the Institute of International Finance, or IIF, and chaired by Vittorio Grilli, the head of the European Union’s Economic and Financial Committee. The EFC is a group of officials who help prepare the regular meetings of European finance ministers. Grilli also is director general of the Italian Treasury.
After today’s talks in Rome, a “meeting or extraordinary EU summit could be called because a final, clear answer must be given to markets,” Greek Finance Minister Evangelos Venizelos said in Athens today, according to an e-mailed transcript from the Finance Ministry. The meeting is now underway, he added.
Greece’s credit rating was cut yesterday three levels to CCC from B+ by Fitch Ratings, which cited the lack of a credible program for the debt-laden nation, uncertainties on the role of private creditors in funding and the growth outlook. Fitch was the third rating agency to cut Greece to the bottom tier of its rankings. It was cut to Caa1 by Moody’s Investors Service on June 1 and CCC by Standard & Poor’s on June 13.
Euro-area finance ministers agreed this week that investors should play a role in the second bailout of Greece currently being discussed, European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels on July 12. The credit rating companies have all threatened to cut Greece to default if the EU goes ahead with its original plan to ask private investors to voluntarily roll over their maturing Greek bonds into longer-term debt.
The minister’s final statement singled out the ECB as opposing a “credit event or selective default.” Luxembourg premier Jean-Claude Juncker, the chairman of the region’s Finance chiefs, said that doesn’t mean that European governments “would do everything in order to provoke a credit event.”
Today’s talks in Rome follow similar meetings organized by the banking lobby IIF on June 27 and July 6, the Italian official also said. IIF Managing Director Charles Dallara said euro-zone finance ministers took an important step this week and suggested they were converging on “more fundamental approaches” for handling Greece’s debt, the Wall Street Journal reported on July 12, citing an interview.