French agree to debt roll-over for Greece

    • French agree to debt roll-over for Greece

    • French banks have agreed in principle to subscribe to new issues of Greek sovereign debt to replace maturing bonds – in effect rolling over existing commitments – on condition that all creditors do the same, according to people with knowledge of the negotiations.

    • The French proposal coincides with the thinking of the European Central Bank, which has indicated that a roll-over of Greek debt, rather than a “reprofiling” with extended maturities, would be an acceptable way for private creditors to be involved in a new deal.

    • French banks are among the largest creditors to Greece, and the French government had sounded them out on their willingness to commit to a roll-over.

    • The German government, however, reaffirmed on Friday its determination to persuade bondholders to contribute more to a rescue. Wolfgang Schäuble, finance minister, told the Bundestag such participation was “essential”, repeating that a seven-year voluntary extension of maturities would be desirable.

    • In France, one senior banking official said the hit for banks from a roll-over would be “manageable” but it remained uncertain how this would affect markets. “It would be changing the rules of the game of the eurozone and we would be journeying into the unknown,” the official said.

    • A group of eurozone officials is expected to report to EU finance ministers on June 20, in time for final agreement on the Greek package by EU leaders at a summit on June 23 and 24.

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