Greece May Seek ECB Debt Rollover to Plug Financing Gap

Published: Tuesday, 25 Sep 2012 | 6:33 AM ET

From http://www.cnbc.com

Greece may seek a rollover of its bonds held by the European Central Bank or try to raise additional short-term debt to plug a possible financing gap in the coming years, a deputy finance minister said in a document released on Tuesday.

Greece's conservative-led government has already admitted that the country is off-track in meeting the terms of its bailout, and European Union officials have speculated that the nation might need a second debt restructuring to get back on track.

If Greece's budget gap or privatization revenue falls short of the targets set out in its second bailout, the country might face a financing gap, deputy finance minister Christos Staikouras said in a written response to a lawmaker dated Sept. 19. He did not specify how big that gap might be.

One solution to cover the gap might be to extend the maturities of Greek debt held by the European Central Bank, Staikouras said.

"With a view to covering the financing gap, and given that the eurosystem is holding 28 billion euros ($36 billion) of Greek bonds maturing in 2013-2016, the possibility of rolling over the maturities will be examined," Staikouras said.

The ECB has so far strictly refused to face any losses on the bonds it has purchased over past years to prop up Greek debt.

Any possible extension of the bonds held by the ECB would be done "within the framework and legal restrictions of the EU's Lisbon Treaty," Staikouras added.

He also said that Greece might have to raise more money from debt markets in 2015 and 2016 than the 10.6 billion euros ($13.7 billion) foreseen in its bailout agreement earlier this year.

Mired in its fifth year of recession, Greece is in talks with its lenders for more austerity measures to cut its deficit.

Link: http://www.cnbc.com/id/49160051