Euro zone finance ministers to rule on glacial Greek debt talks

Sun Jan 22, 2012 6:02pm EST
 
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By Jan Strupczewski and Ingrid Melander

BRUSSELS/ATHENS (Reuters) - Euro zone finance ministers will decide on Monday what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens after negotiators for private creditors said they could not improve their offer.

Resolving the issue of a Greek debt swap is key to putting Athens' debt on a sustainable path and avoiding a chaotic default that could threaten the whole currency bloc.

After several rounds of talks, Greece and its private creditors are converging on a deal in which private bondholders would take a real loss of 65 to 70 percent on their Greek bonds, officials close to the negotiations said.

But some details of the debt restructuring, which will involve swapping existing Greek bonds for new, longer-term bonds to bring Greek debt down to a more sustainable 120 percent of GDP in 2020 from 160 percent now, are unresolved.

"What I am confident of is that our offer, that was delivered to the prime minister, is the maximum offer consistent with a voluntary PSI deal," Institute of International Finance chief Charles Dallara, who is negotiating on behalf of banks and insurers holding Greek debt, told Antenna TV on Sunday.

"We are at a crossroads and I remain quite hopeful," said Dallara, who left Athens on Saturday without a deal in place.

"We will listen to the report on the negotiations, see how far they have gotten and have the ministers say what is acceptable and what is not in terms of outcome of the negotiations," one Eurogroup official said.

Once the guidance from the finance ministers, known as the Eurogroup, is clear, talks on the restructuring could be finalized later in the week.   Continued...

 
<p>Head of the Institute of International Finance (IIF) Charles Dallara enters the Greek Prime Minister's office in a car in Athens January 20, 2012. REUTERS/Yiorgos Karahalis</p>