April 22, 2011 / 9:40 AM / 8 years ago

UPDATE 1-Greece may extend debt maturities- Greek press

* Greece exploring debt extension - newspapers

* Ta Nea says would be implemented in late 2011

* Outstanding debt could be extended by average of 5 yrs

(Adds detail, background)

ATHENS, April 22 (Reuters) - Greece is considering extending maturities on its sovereign debt to make it sustainable, two national newspapers said on Friday, joining a flurry of recent press reports outlining options for a possible restructuring.

Greek and EU officials have steadfastly denied a debt restructuring is planned, in the face of mounting evidence that markets are factoring one in.

A spokeswoman for the finance ministry was not immediately available for comment on Friday’s reports.

The country’s top-selling newspaper Ta Nea said without citing a source that the government was mulling “a velvet restructuring” that would include extending outstanding debt and a voluntary agreement with lenders to modify repayment terms.

Such a step would have to be taken before 2012, the newspaper said, but not before the expiry of the term of ECB chief Jean-Claude Trichet, who steps down at the end of October.

The Greek official in charge of the informal debt extention talks “seems to be” Finance Minister George Papaconstantinou and a technical team of advisors, the newspaper said without elaborating with whom they were holding talks.

Papaconstantinou on Wednesday reiterated that a debt extension or other restructuring was out of the question, adding that the country was still planning to return to the bond market by early 2012.

Papaconstantinou’s statement came after a report in German daily Die Welt quoted an unnamed Greek minister as saying that restructuring was just a question of time. [ID:nLDE73H1W3] The Greek government spokesman dismissed the report.

According to another report on Friday in Greek newspaper Isotimia, the government might seek to extend the maturities of its outstanding debt by an average of five years. This would happen after an agreement with its lenders, the newspaper said, citing government sources it did not name.

No final decision to propose such a solution has been taken and discussions were still at an informal level, Isotimia said.

Greece has been shut out of financial markets in the wake of its debt crisis last year. Papaconstantinou said on Wednesday he considered Greece’s debt — expected to hit about 160 percent of GDP in 2012 — “totally sustainable” and that restructuring was not an option.

But given the sheer size of the country’s debt set against a continuing economic slump, markets are increasingly factoring in a restructuring.

Some 46 of 55 economists polled by Reuters in a survey published on Wednesday said they expected Greece would have to restructure its debt in the next two years, with a maturity extension the most likely option. [ID:nLDE73J1N8]

Also on Wednesday, the cost of insuring Greek five-year government debt hit a record highs of 1,275 basis points, meaning it cost 1.275 million euros to insure 10 million euros of debt — more than Iceland’s premium in 2008 when its financial system imploded.

Most European markets were closed on Friday for the Easter holiday.

Reporting by Harry Papachristou; Editing by John Stonestreet

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