Greece Funding Needs May Be Greater Than Believed

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The discussions over a deal to cut Greek debt by €100 billion and reduce the country’s debt level to 120% of GDP by 2020 are currently stalled on the interest rate private bondholders will accept on new Greek bonds after they take a 50% haircut on the face value of the bonds they currently own. But that may not be the biggest problem.

The Greek rescue package may have to be enlarged, and neither Eurozone governments or private bondholders or the European Central Bank are willing to accept a larger role in the second round of Greece’s bailout funding. An excellent story at MarketWatch cites observers who think an additional €20 billion will need to be made up if the deal is to go through.