Germany wants private creditors to support Greek plan

Germany has the ?clear expectation? that private creditors will join in any further financial support granted to Greece, Finance Minister Wolfgang Schaeuble?s chief spokesman said.

Euro-area governments will discuss a report on Greece?s progress in adhering to the terms of its international bailout at a meeting in Vienna today, said ministry spokesman, Martin Kotthaus.

They may also talk about creditor involvement in Greece in the event that any additional help is needed, he said.

?If the public sector, including taxpayers, were to agree to give the Greeks more breathing room, then I think it?s obvious to have private creditors join such a project,? Kotthaus said.

?I can?t tell you how that looks in detail because we?re waiting for the questions and answers? from the Greece inspectors? report.

Whatever the outcome of the assessment, ?it?s self- evident? that governments can?t be on the hook while private investors reap the benefit, since involving private investors adheres ?to the basic principles of fairness and justice,? Kotthaus said.

?It?s important that the private sector doesn?t abandon its responsibility if the public sector gives more time? for Greece?s rescue, he said.

With investor expectations rising that Greece will be provided with additional money by the EU and IMF that will help the country avoid default, Greek bonds gained for a third day Wednesday, to the lowest in more than two weeks.

Yields on the notes due 2013 sank 44 basis points to 24.57 percent early in the day, the least since May 17.

Earlier, German government adviser Peter Bofinger floated the idea of helping Athens by via a Brady bond-style rescue operation in which Greek government bonds are swapped against debt issued jointly by euro-region members.

Joint euro-region bonds would be helpful for Greece because they would carry a very low interest rate and they would be good for banks because lenders would receive AAA-rated bonds in exchange for lower-rated paper, he told Bloomberg.

?Sooner or later we have to come to the euro bonds,? Bofinger said. ?There is definitely no alternative to the instrument and it would really improve the situation considerably.?

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