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EU Backs Debt Rules Retreating From Merkel Demand for Writeoffs

European finance leaders endorsed a Franco-German compromise on post-2013 sovereign bailouts that waters down calls by German Chancellor Angela Merkel for investors to assume losses and share the costs with taxpayers.

The plan asks investors to take writeoffs on a “case-by-case” basis, according to a statement issued today by euro- area finance ministers after a meeting in Brussels to ratify a bailout for Ireland. The proposal is designed to address “collective action clauses” for debt issued after temporary crisis facilities expire in 2013. Such clauses allow bondholders to change terms of their contracts.