Greek government calls in Interpol over Citigroup trader's email as restructuring speculation mounts
Greece's prime minister, George Papandreou, has launched a new attack on credit rating agencies amid mounting expectation that Greece was considering ways to restructure its debts.
On the first anniversary of the Greek bailout by the International Monetary Fund and the EU, Papandreou said on a government website that agencies were "seeking to shape our destiny and determine the future of our children".
His outburst came as the Greek authorities focused on a London trader at US bank Citigroup in their attempts to get to the bottom of rumours that the government would restructure its debt as early as this Easter weekend.
In an email sent on 20 April Paul Moss, a Citigroup employee, outlined "market noise" about a possible restructuring, when rumours were rife in the markets. Shares in Greek banks fell 4.7% that day, infuriating the Greek authorities, which have called in Interpol. Citi is adamant that neither it nor its employees have done anything wrong. Greek authorities said they were awaiting news of what they hoped would be an in-depth investigation.
"Our cybercrime division has sent paperwork asking for the individual to be questioned," said a police spokeswoman.
On 20 April the Reuters news agency said 46 out of 55 economists expected Greece to have to restructure its debt in the next two years, with extending loans' maturity the most likely option.
Greek newspapers later reported on 22 April that this was what the country was privately already discussing. The country's top-selling newspaper, Ta Nea, described "a velvet restructuring" that would include extending outstanding debt and a voluntary agreement to modify repayment terms. The paper said this would need to take place before 2012. Describing the informal talks, the paper said the Greek official in charge was finance minister George Papaconstantinou, who has reiterated that a debt extension or other restructuring was out of the question.
Officially, the country is planning to return to the bond market early next year – reducing the urgency for a bailout – and Papaconstantinou claimed the debt was "sustainable" even though it is expected to hit 160% of GDP in 2012.
Another Greek newspaper, Isotimia, reported that the government might seek to extend the maturities of its outstanding debt by an average of five years.
In March Papandreou hit out at a downgrade by ratings agency Standard & Poor's – to BB – saying that the country was being downgraded not because of its policies but because of the EU's handling of the crisis. While Greece has never had a top-notch AAA rating it has been downgraded or warned of a downgrade eight times since January 2009, when it had an A rating. A year ago, just after the bailout, it was the first eurozone country to have its debt rating cut to junk when S&P had warned that bondholders could recover as little as 30% if the country restructured its debt.
The cuts to the ratings help to push up the cost of borrowing for Greece on the international bond markets. Before the markets shut for the long Easter weekend, the yield on 10-year bonds was above 15%. Yields rise when bond prices fall. Germany, regarded as the safest borrower in the eurozone, has a yield of 3.27%.