GERMANY's finance ministry has come up with a model for a new aid package for Greece that would include the voluntary participation of private creditors, 'Welt am Sonntag' newspaper reported yesterday.
The newspaper said a new plan called for investors who hold Greek bonds due to mature in 2012 to 2014 to voluntarily exchange those for new sovereign debt instruments with an extended maturity of seven years. The finance ministry did not comment on the report.
'Welt am Sonntag' quoted from an unofficial paper from the ministry saying it is possible in principle to structure a conversion of debt in such a way to avoid default.
According to the plan, creditors could be motivated to join in a voluntary exchange with the help of a so-called "collective action clause" that would be introduced into bond contracts in the event not enough investors were prepared to take part.
At the same time, investors who swap their old bonds into new bonds would get preferential treatment in the future if another rescheduling is needed.
There are concerns that Greece will eventually be forced into a coercive restructuring of its debt, which stood at nearly €330bn, or close to 150pc of GDP, at the end of last year.
A harsh restructuring that would force losses on private creditors has been ruled out for now, but Germany, Finland and the Netherlands are insisting on some sort of symbolic participation from the private sector.