Greece seeks talks on €30bn rescue

By Kerin Hope in Athens

Published: April 15 2010 16:04 | Last updated: April 15 2010 16:04

Greece capitulated to market pressure on Thursday and asked the European Commission for “consultations” on a €30bn ($41bn) loan package to stave off default.

George Papaconstantinou, finance minister, said in a letter to Brussels the government wanted to discuss “a multi-year economic policy programme with the Commission, the European Central Bank and the International Monetary Fund.”

EDITOR’S CHOICE
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“The programme would be supported by financial aid from the eurozone countries and the IMF – if the Greek authorities decide to ask for such aid,” Mr Papaconstantinou said.

The move came as yields on 10-year Greek bonds widened. Spreads over German Bunds reached 460 basis points before falling back to around 400 basis points after Mr Papaconstantinou’s announcement was made.

The IMF would be expected to make available another €10bn-€15bn as a stand-by loan on top of the €30bn available from eurozone member-states.

If it applied for the funds, Greece would be able to cover its borrowing requirement for the rest of the year, analysts said.

Earlier, Greece reaffirmed plans for a roadshow to the US next week with a view to launching a dollar bond within the next few weeks.

A senior finance ministry source denied the roadshow had been postponed because of soaring spreads on Greek government bonds and a lack of investor interest.

“This is nonsense. There is absolutely no change to our plans regarding the US roadshow,” the source said, speaking on condition of anonymity.

But bankers and fund managers said it was unlikely that Greece would be able to raise funds in dollars until uncertainty over the loan package was resolved.

Athens debt managers said earlier this month Greece wanted to raise €5bn-€10bn in the US to help re-finance €8.4bn of loans maturing in May and also fund the budget deficit.

“It would be very difficult at this point to find willing investors to offer anything lower than the current high market rates,” said one fund manager.

F.T.