Merkel Rules Out Second Writedown in Greece as Too Risky

German Chancellor Angela Merkel rejected a second Greek debt writedown as officials weigh additional measures to prop up the bailed-out nation.

“I’ve said repeatedly that I don’t see a debt cut for Greece,” Merkel told reporters in Berlin today at a press conference. “All this talk about it sometimes worries me.”

Merkel echoed her finance minister, Wolfgang Schaeuble, who went to Athens yesterday to urge the country to stand by its commitments to overhaul its economy and repair its finances. Schaeuble raised the prospect of debt relief building on previous measures such as cutting the rate on bailout loans. He also ruled out a debt writedown.

In 2012, Greece benefited from the biggest-ever sovereign restructuring. Private investors took a 53.5 percent loss on the face value of their Greek bond holdings, reducing the nation’s debt by about 100 billion euros ($131 billion).

“You have to consider the consequences” of a second writedown, Merkel said. “Maybe someone else would like to have a debt cut then. That can lead to such massive insecurity among investors into the euro region that everything we did in the last few years would be called into question. It’s not for nothing that when we did the debt relief, we chose a voluntary agreement with the private creditors. You have to look far beyond Greece to see what this would mean.”

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