Bondholders are overestimating the risk that Greece will seek additional debt forgiveness or leave the euro after the country carried out the largest restructuring in history, said Domingo Cavallo, who led Argentina’s efforts in 2001 to avoid what would become a record sovereign default. This month’s restructuring, which allowed Greece to write off more than 100 billion euros ($131 billion) in debt, provides the country enough relief to allow it to overhaul the economy, said Cavallo, who resigned as economy minister as Argentina defaulted on $95 billion in December 2001. European policy makers may lower the costs of the region’s loans to Greece if needed and will help keep the country in the euro, he said.
Greek Bonds Overstate Restructuring Risk
Bondholders are overestimating the risk that Greece will seek additional debt forgiveness or leave the euro after the country carried out the largest restructuring in history, said Domingo Cavallo, who led Argentina’s efforts in 2001 to avoid what would become a record sovereign default. This month’s restructuring, which allowed Greece to write off more than 100 billion euros ($131 billion) in debt, provides the country enough relief to allow it to overhaul the economy, said Cavallo, who resigned as economy minister as Argentina defaulted on $95 billion in December 2001. European policy makers may lower the costs of the region’s loans to Greece if needed and will help keep the country in the euro, he said.