Greek bond swap deal may soon be reached: official

Thu Dec 29, 2011 1:47pm EST
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By George Georgiopoulos

ATHENS (Reuters) - Greece could soon reach a deal with banks and private creditors on a bond swap to reduce its mountain of debt, the government spokesman said on Thursday, as it tries to resolve differences with its creditors and avoid default.

The deal is a pivotal part of a second, 130 billion euro ($168.3 billion) bailout package for Athens agreed by euro zone leaders in October. Greece, which faces bond redemptions of 14.5 billion euros in March, needs to seal the deal to avert a costly default.

"I think there will be an agreement relatively soon. I don't think there will be a problem with this deal," government spokesman Pantelis Kapsis told Real News radio.

"Apart from that, (the issue is) how many (bondholders) will participate, which will be seen at the end of next month or in early February," he said.

Banks and investment funds have been negotiating with Athens for weeks on the so-called private sector involvement (PSI) scheme under which they will accept a nominal 50 percent writedown on their Greek bond holdings in return for a mix of cash and new bonds.

Greek officials including Finance Minister Evangelos Venizelos have been putting a brave face on the tense talks, expressing confidence that a deal will be struck.

But bankers following the talks have been less optimistic.

Greece aims to cut its debt by 100 billion euros via the deal, reducing its debt-to-GDP burden from 160 percent to a more manageable 120 percent by 2020.   Continued...