Euro Ministers Reach Agreement on Greek Bailout
Euro-area finance ministers reached agreement on a second bailout package for Greece that is vital to staving off a default next month, a European Union official said. The euro jumped one cent against the dollar.
Finance ministers haggled into the night in Brussels over the terms of new loans to Greece and a possible contribution by central banks, and leaned on investors to accept bigger write- offs in a bond exchange. Ministers were discussing a Greek debt target of 121 percent of gross domestic product by 2020 and a private-sector haircut on Greek bonds of 53 percent, another EU official said.
European Central Bank President Mario Draghi called the deal “a very good agreement.” Italian Prime Minister Mario Monti said private bondholders agreed to take a bigger writeoff on their Greek debt after “intense” negotiations.
The euro surged on news of a deal, rising as high as $1.3293 and trading up 0.1 percent at $1.3260 at 5 a.m. in Brussels.
European governments need to weld together the program to give enough time for the bond exchange -- designed ultimately to write off about 100 billion euros of Greek debt -- to go ahead by a mid-March deadline. The target is for the swap offer to run from Feb. 22 to March 9, so the exchange takes place in time for Greece to escape the full 14.5 billion-euro cost of a March 20 bond redemption, German lawmakers were told last week by government officials.
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