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- A Greek (R) and an EU flag fly over the Greece's Finance Ministry in Athens November 3, 2011. REUTERS/Yannis Behrakis
By Alex Chambers and Steve Slater
LONDON (Reuters) - A disorderly Greek default would probably leave Italy and Spain needing outside help to stop contagion spreading and cause more than 1 trillion euros ($1.3 trillion) of damage to the euro zone, the group representing Athens' bondholders warned.
Greek private creditors have until Thursday night to say whether they will take part in a bond swap that is part of a 130 billion euros bailout deal to put the country on a more stable footing and cut its debt by more than 100 billion euros.
Finance Minister Evangelos Venizelos told Reuters on Monday the exchange was the best deal bondholders will get and he would activate laws forcing losses on bond holders who did not sign up.
Analysts said the Institute of International Finance February 18 document, marked "IIF Staff Note: Confidential" may have been designed to alarm investors into participating in the exchange.
"There are some very important and damaging ramifications that would result from a disorderly default on Greek government debt," the IIF said in a document obtained by Reuters.
"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros."... read more.
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