A new restructure of the Greek debt could render the Greek bonds a safer investment than that of many other Eurozone countries, major US bank Morgan Stanley says in a video sent over the Internet to its customers.
Morgan Stanley, a negotiator of Greek bonds, said that if Greece were to receive the same margin that was given in the past by its European creditors, the debt to GDP ratio now amounting to 175% of GDP would have the same «credit risk» with a country that has a debt of 88%.
Seven countries in the Eurozone have a higher debt to GDP ratio: Portugal (128%), Ireland (123%), Italy (128%), Belgium (105%), Cyprus (102%) and Spain and France (92% both).
The credit risk of Greece’s 320 billion euro debt can be reduced to a lower level than that of other Eurozone countries, Paolo Batori, the bank’s head of strategy for bonds of emerging countries, said.
Batori argues that much of the debt (the EFSF loan of 107 billion euros) should not be counted as it does not bear interest for the next 8 years and is not expected to be repaid over the next 30 years.
He added that if Greece’s bilateral loans (53 bn. euros) from other Eurozone countries were to be restructured in a manner corresponding to the loans from the European Financial Stability Facility (EFSF), then these could be calculated at a discount, making Greece’s debt particularly manageable.
