Europe's policy options to avert a Greek default are narrowing fast after the ECB and ratings agencies warned against even voluntary debt rescheduling and Athens highlighted its urgent need for more EU cash.
Moody's became the latest agency on Tuesday to warn of a chain reaction of severe consequences for the 17-nation euro area if Greece were allowed to default next month, when it faces a 13.4 billion euro ($18.85 billion) funding crunch..''
''..A Greek default could take many forms, including changes in the terms and conditions or a selective reprofiling, Moody's said, adding it would consider all of these to be distressed debt exchanges. [ID:nLDE74N0AQ]
That would appear to leave the EU only the option of lengthening maturities on official loans to Greece and lowering the interest rate further, while giving Athens a supplementary aid package to cover its 2012/13 borrowing needs in return for additional deficit reduction and privatisation commitments.
Political sources said European conservatives, including Germany's Angela Merkel, would pressure Samaras to back such a new IMF/EU programme, as Portugal's centre-right party has done..''
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