Wednesday, February 22, 2012

Greek Deal Skepticism Weighs on Markets

Markets were subdued Wednesday as investors worried that the Greek bailout plan might not be enough to keep the country from eventually defaulting on its debts and possibly leaving the euro currency bloc.
Under a deal reached Tuesday, Greece will get euro130 billion ($172 billion) from its partners in the 17-nation eurozone and the International Monetary Fund to meet its immediate debt obligations. It is Greece's second bailout following a euro110 billion ($146 billion) rescue in 2010.
Separately, Greece's private sector bondholders will be asked to forgive euro107 billion ($141 billion) in Greek debt by taking a 53.5 percent loss on the face value of their bonds and accepting longer repayment periods and lower interest rates.

Though Greece's finance minister Evangelos Venizelos hailed the deal as "a significant development that gives our country a new opportunity," investors remained cautious, not least because Greece has to enact economic reforms in a very short space of time to get its hands on the money.
The package's lack of measures aimed at boosting economic growth also caused concern in the markets. Greece is entering its fifth year of recession and is forecast to contract a further 4 percent or so this year.

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