BRUSSELS — Euro-zone leaders agreed Thursday to a sweeping deal that will grant Greece a massive new bailout — but likely make it the first euro country to default — and radically reshape the currency union’s rescue fund, allowing it to act pre-emptively when crises build up.
The euro-zone countries and the International Monetary Fund will give Greece a second bailout worth $155 billion, on top of the $158 billion granted a year ago.
Banks and other private investors will contribute about $71 billion to the rescue package by rolling over Greek bonds that they hold, swapping them for new ones with lower interest rates or selling the bonds back to Greece at a low price.
“For the first time since the beginning of this crisis, we can say that the politics and the markets are coming together,” said European Commission president Jose Manuel Barroso.
Initial reaction from markets and analysts was cautiously positive. The euro, which had rallied sharply on expectation of the deal, edged up further to gain 1.2 percent against the dollar.
The “summit conclusions surprise by their size and range,” Marie Diron, senior economic adviser at Ernst & Young, said in a note. “The measures imply significant private-sector involvement and very large further support from the EU. All politically acceptable measures are being used.”
The euro zone will back up any new Greek bonds issued to the banks with guarantees if the deal is seen as a “selective default” by rating agencies, which is widely expected. If the agencies make true on their warnings, Greece will become the first euro country to ever be in default — if likely only for a short period of time.
