Greek Haircut Is ‘Unavoidable’, Merkel Adviser Franz Tells Focus

Wolfgang Franz, head of German Chancellor Angela Merkel’s council of economic advisers, said it’s “unavoidable” that investors in Greek debt will have to forfeit some repayments and interest, Focus magazine reported, citing an interview.

Investors could swap Greek debt for discounted bonds issued and guaranteed by the European Financial Stability Facility, Focus cited Franz as saying.

Banks and insurers would get AAA-rated securities in exchange for their Greek holdings, Franz told the magazine. He added that the European Union would have to discuss making the same offer to Portugal and Ireland.

The EFSF would take on about 170 billion euros ($241 billion) of debt for Greece alone under such a plan, Focus cited Franz as saying.

To contact the reporter on this story: Oliver Suess in Frankfurt at osuess@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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