With Greek negotiations hanging in balance, European investors shy away from ... Washington Post

24.01.12

The private holders of the debt made their own stand over the weekend, saying they had given leaders their most generous offer, though they did not detail what it was. On Tuesday, Charles Dallara, the head of the group that represents the creditors, warned that Europe is putting “decade of progress at risk” in the talks.

The deal is crucial to Greece’s and the eurozone’s stability since it’s clear there is no way Athens can ever pay back all that it owes. Banks that hold Greek debt have already been asked to take a 50 percent loss on those investments — and some think even that writedown isn’t big enough.

The negotiations involve a delicate balancing act between getting a deal large enough to ensure that Greece can someday dig out from under its pile of debts but not so harmful to banks that it scares investors off from investing in any eurozone debt.

European leaders have promised Greece is a special case and bondholders won’t ever be asked to take losses again, but there are signs that investors are staying clear of the bonds of other vulnerable countries such as Portugal.

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