Debt "reprofiling" different from restructuring: EU

BRUSSELS (Reuters) - The European Commission sought to draw a distinction on Monday between debt restructuring and debt “reprofiling” and said there was no prospect of a Greek restructuring.

The Commission’s spokesman on monetary affairs, Amadeu Altafaj, said “reprofiling” did not necessarily involve the same players and did not have the same consequences. He did not elaborate.

Analysts have described reprofiling as akin to rescheduling, with the time for repayment being extended but the value of the debt not being marked down.

It might involve exchanging two-year for five-year debt, for example, thus changing the “profile” of the yield curve and giving the debtor more time to repay.

Greece’s debt currently stands at around 150 percent of gross domestic product, a level that is considered unsustainable, particularly given that the size of the economy has contracted and any growth is likely to be minimal.

Debt analysts expect some form of restructuring in the coming months, although such a move has repeatedly been dismissed by Greek authorities and the European Commission.

“Reprofiling is one concept, debt restructuring is a different concept,” Altafaj said in response to a question on potential changes to Greece’s debt servicing schedule.

“It doesn’t involve necessarily even the same players and doesn’t have the same consequences,” he said, adding that a restructuring of Greek debt, which would be devastating for the country, was “not in the cards.”


Pressure on Greece to get its fiscal house in order remained acute on Monday, with sources saying inspectors from the EU and IMF, which bailed the country out last year, were not yet happy with its proposed budget steps and would return to Athens for more talks on fiscal and privatisation plans.

Greece is among the issues scheduled for discussion at a meeting of euro zone finance ministers in Brussels on Monday.

A source in Germany’s ruling coalition said last week EU ministers were talking about “reprofiling” Greece’s bailout loans, with the voluntary inclusion of private investors.

Athens is pushing to have more time to repay loans from the 110 billion euro EU /IMF package and may also be seeking a lower interest rate.

It has so far drawn on about half the money, with the loans for 7.5 years and at an interest rate of 4.2 percent, terms which have already been softened once.

Because it is highly unlikely that Greece will be able to return to the market to finance itself in 2012 as was previously expected, it may need more assistance from the EU and IMF to cover about 60 billion euros of financing costs.

That would amount to a second bailout for Greece, but such a move is not expected to be discussed on Monday.

Reporting by Jan Strupczewski, editing by Rex Merrifield, John Stonestreet