EU to discuss bond sale to fund Greece bailout

London: European Union finance ministers will discuss this week whether any Greek bailout should be funded by EU bonds guaranteed by euro region governments, said three people briefed on preparations for the March 15-16 meetings.

Another option would be for governments in the 16-nation bloc to give Greece loans to help the country finance its budget deficit, said the people, who spoke on condition of anonymity because the talks are private.

Any EU bond sale would have to be agreed upon by all 27 EU nations, they said. Euro region ministers meet in Brussels on March 15 and will be joined by the rest of the EU the next day.

EU leaders have signalled they may offer Greece fin-ancial assistance if necessary, though German Chancellor Angela Merkel has so far refused to publicly give the green light for any such aid. Greece's bonds have stabilised in the past month and the government last week announced a 4.8 billion-euro (Dh24 billion) austerity package to cut a deficit that was 12.7 per cent of gross domestic product last year.

Germany's 10-year government bonds extended declines and the yield rose 4 basis points to 3.213 per cent yesterday. The euro was little changed at $1.3765 at 1.25pm in Frankfurt.

EU ministers will also discuss whether the mechanism used in any bailout should be formalised for use in future crises or whether they should just be a one-off, said the people briefed on the discussions.

One of the people said that the loans may only be used to stave off a default.

French President Nicolas Sarkozy said March 7 the euro region is ready to rescue Greece and "fulfill its commitments" if necessary, saying "we have measures, we are ready, we are determined."