EU admits Greece may need to undertake voluntary restructure

GREECE could embark upon a voluntary restructuring of its debt, EU officials admitted for the first time yesterday, saying that a “soft restructuring” is one of the options available.

At a summit of EU finance ministers yesterday (Ecofin), Eurogroup chairman Jean-Claude Juncker said the option depends on Athens meeting deficit reduction targets: “If Greece makes all these efforts, then we must see if it is possible to make a soft restructuring of Greek debt.”

Economics commissioner Olli Rehn added: “A voluntary extension of loan maturities, could also be examined.”

A voluntary restructuring is likely to involve Athens’ creditors agreeing to extend the maturity on sovereign bonds they own without a rise in yield.

Meanwhile, Ecofin also reached an agreement to ban naked short-selling of sovereign bonds (short-selling in which the trader does not own the underlying asset), but not of sovereign debt credit default swaps (CDS). Hedge fund industry sources said the move is effectively a victory for traders because “no one short-sells government bonds – they buy interest rate swaps”.