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Greece gets new rescue deal, with help from private creditors

Posted: September 30, 2011 - 4:37am

BRUSSELS — Eurozone leaders on Thursday agreed to a sweeping deal that will grant Greece a massive new bailout — but likely make it the first euro country to default — and radically reshape the currency union’s rescue fund, allowing it to act pre-emptively when crises build up.

The eurozone countries and the International Monetary Fund will give Greece a second bailout worth $155 billion, on top of the $157 billion already granted a year ago.

Banks and other private investors will contribute some $71 billion to the rescue package by either rolling over Greek bonds that they hold, swapping them for new ones with lower interest rates or selling the bonds back to Greece at a low price.

“For the first time since the beginning of this crisis, we can say that the politics and the markets are coming together,” said European Commission President Jose Manuel Barroso.

Initial reaction from markets and analysts was cautiously positive. The euro, which had rallied sharply on expectation of the, edged up further to gain 1.2 percent against the dollar.

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