Soros: Greece Still at Risk of Debt Spiral Despite Rescue Deal

A European rescue deal to help Greece tackle its debt crisis is only a small step and the country could still fall into a "debt spiral," legendary financier George Soros warns.

Greece's 15 euro zone partners offered on Sunday to lend Athens 30 billion euros ($41 billion) this year at below market rates in order to calm fears of a default.

A further 15 billion euros could come from the International Monetary Fund, helping to restore confidence in Greece and thereby aiming to push down the interest rates it must pay to raise fresh funds on the markets.

But Soros, who has made billions from currency speculation, said the move was "just a little step."

"While five percent (the rate at which other euro zone members are willing to make the loans to Greece) is better than what the market is willing to offer ... a rescue package should offer concessional rates," he said Tuesday in London.

If Athens is forced to pay interest rates on borrowing that are too high, it could push Greece into a "debt spiral," said the 79-year-old.

"That is still a danger that remains for Greece," he added.

He called for euro zone countries to go further and put in place a "guarantee mechanism." This would permit Greece or other members of the single currency, such as Spain, to borrow on favorable terms.

Soros, who is a U.S. citizen but originally from Hungary, infamously made a huge profit by betting against pound sterling in 1992 as Britain was forced to withdraw the currency from the European exchange rate mechanism.