The damage to the rest of Europe from Greece leaving the euro would be “somewhere between catastrophic and Armageddon”, the chief negotiator for the body representing private sector holders of Greek bonds said yesterday.

A massive debt relief deal for Greece constitutes a so-called credit event, meaning it will trigger payouts on bond insurance, the agency that oversees financial derivatives said.

GREECE was closing in on an initial deal with private bond holders last night that would prevent it from tumbling into a chaotic default but lose investors up to 70% of the loans they have given to Athens.

THE European Central Bank is “being stretched” in its current role as buyer of last resort for European sovereign debt, the head of a global association of financial institutions has said.