IIF says creditors at limits of "voluntary" Greek deal

Sun Jan 22, 2012 4:40pm EST
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By Lefteris Papadimas and Steve Slater

ATHENS/LONDON (Reuters) - Private creditors said on Sunday they had come to the limits of what losses they could concede in a Greek debt swap, putting the ball in the court of the EU and the IMF in a tense race against the clock to avoid a messy default.

Athens needs a deal on the plan, meant to cut 100 billion euros (£129.3 billion) from its debt burden of over 350 billion, in coming days to stay afloat when a major debt redemption falls due in March.

Greece and its private creditors are converging towards an agreement that would see private creditors accepting a real loss of 65 to 70 percent, sources close to the talks said after several rounds of talks last week.

Athens and its creditors have broadly agreed that under the so-called PSI deal, the new bonds would likely feature 30-year maturity and a progressive interest rate averaging out at 4 percent, sources said.

But many details are still unresolved and the plan must also win approval from the IMF, EU paymaster Germany and the other euro zone countries, who insist the deal must put Greece's debt back on a sustainable track.

The offer conveyed to the Greek authorities "is the maximum consistent with a voluntary deal," a spokesman for the Institute of International Finance, which negotiates in the name of private creditors, said on Sunday.

The "voluntary" character of the debt restructuring is important for the euro zone to avoid triggering the pay-out of insurance against a Greek default.

Much of the attention will now turn to a meeting of euro zone finance ministers on Monday, and to whether EU states and the IMF consider that the plan that is being put together by Athens and private bondholders does enough to cut Greece's debt.   Continued...