The euro zone edged closer on Wednesday to a compromise on a second Greek bailout package under which private creditors would be asked to swap their sovereign debt holdings for bonds with longer maturitie, Reuters reported. Several euro zone bankers, including the head of French heavyweight Credit Agricole, said they would support a maturity extension, a move that would not reduce Greece's massive debt burden but could buy it more time to meet its fiscal targets and avoid a harsher restructuring. The European Central Bank, which has argued loudly against any form of debt restructuring, may also be warming to the idea of private sector involvement if a cut in the principal of Greece's debt -- a "haircut" -- can be avoided. Greece sealed a 110 billion euro aid-for-austerity deal a year ago but has failed to restore confidence in its finances and a new package is in the works which could total 80-100 billion euros to cover Athens' funding needs through 2014. Whether and how to involve the banks, hedge funds and other private holders of Greek debt in the new package has been hotly debated for weeks, with some officials worrying such a step could unleash contagion that envelops new countries like Spain, with disastrous consequences for the currency bloc. On Wednesday, France said it rejected any restructuring of Greece's debt and would not change its stance. But the German government, worried about a backlash from angry taxpayers and a possible rebellion in parliament, has been pushing hard for some form of private creditor involvement. In a June 6 letter sent to the heads of the European Central Bank, International Monetary Fund and his euro zone counterparts, German Finance Minister Wolfgang Schaeuble demanded a "quantified and substantial" contribution from bondholders as part of any new Greek package. -- SPA
