UPDATE 2-Greece says not seeking debt repayment extension
Tue Jan 18, 2011 8:42am EST
*
Greece denies aiming to stretch out repayment of all debt
* Deputy PM believes move could help, but no haircuts
* Analysts say restructuring may be inevitable
* Greek bond/Bund spread widens
(Adds government spokesman, analyst, spread)
By George Georgiopoulos and
Dina Kyriakidou
ATHENS, Jan 18 (Reuters) - The Greek government denied on Tuesday it would seek to extend repayment of its whole debt, hours after the deputy prime minister spoke in support of the idea of a form of debt restructuring.
Theodoros Pangalos, a veteran socialist serving as Prime Minister George Papandreou's number two, told a TV show late on Monday that he believed Greece should extend repayment on its total debt, not just the 110 billion euro IMF/EU bailout.
That would play into fears among investors that Greece sooner or later will be forced to restructure its debt with private creditors despite the international aid. "Mr. Pangalos expressed a personal political view," government spokesman George Petalotis told reporters. "There is no question of extending the repayment of the total debt."
Worries over Greece's ability to service a debt mountain projected to hit 157.3 percent of GDP in 2013, after its EU/IMF emergency funding ends, have kept yield spreads of Greek government bonds over German bunds close to peak crisis levels.
Many economists say restructuring is inevitable for Greece, forced to take growth-stifling austerity measures to meet the terms of a bailout that has pulled it back from the brink of bankruptcy.
"We think Greece will restructure its debt and that probably it is in its best interest to do so," said Ben May, European economist at Capital Economics. "We think the cost to the economy of a very long and prolonged squeeze on a great scale on such a sustained period is just too high."
Pangalos, whose controversial comments often put the government on the spot, told Skai TV's New Files news programme that he believed extending repayment of all outstanding debt without any "haircut" would benefit Greece and that Finance Minister George Papaconstantinou may already be discussing this.
NOT DISCUSSED
Spreads between 10-year Greek bonds and benchmark German Bunds, already at prohibitively high levels, widened by about 27 basis on Tuesday.
The government has repeatedly dismissed talk of debt restructuring and Papaconstantinou told reporters in Brussels there was no difference of opinion in the government.
"They are likely to deny it until they actually seek it but the fact that one or two officials are talking about some form of restructuring is obviously interesting," Capital Economics' May said, adding that such talk only leads bond yields higher and makes it more difficult for
Greece to return to markets. Several euro zone sources said the issue had not been discussed with European officials at all and that Papaconstantinou did not even mention the subject at a meeting of euro zone finance ministers on Monday.
"This has not even been discussed. It is domestic political games," one senior
euro zone source said.
... io baso le mie previsioni sulla situazione macro , ovviamente non ho alcuna possibilita' di prevedere le oscillazioni giornaliere dovute alle varie uscite delle "autorita'" finanziarie.
