Europe & Asia
The chief negotiator for Greece's private creditors says they have come to the limits of what losses they could concede for a Greek debt swap plan to be ''voluntary'', adding the ball was now in the court of the EU and the IMF.
Athens needs a deal on the plan, that is meant to cut 100 billion euros from its debt burden of over 350 billion, in the coming days to avoid a messy default when a major debt redemption comes due in March.
To achieve that, the Greek government needs to finalise talks with private bondholders, but it also needs the approval of the EU and the IMF, who insist the deal must cut its debt mountain enough to put it back on a sustainable track.
After several rounds of talks from Wednesday to Friday, Greece and its private creditors are converging towards an agreement that would see private creditors accepting a real loss of 65 to 70 per cent, sources close to the talks have said, while adding that many details are still unresolved.
Athens and its creditors 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 per cent.
''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 told Antenna TV overnight, without discussing the details of the plan or the level of the coupon.
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 put Greece's debt back on track.
''It is a question, now, really of the broader reaction of the EU official sector and of course the IMF on this proposal,'' Dallara said.
The IMF insists any deal must ensure Greece's debt burden will be cut to 120 per cent of GDP by 2020 from 160 per cent now, as agreed at an EU summit in October. It has also warned that more efforts must be made by private bondholders or EU states to compensate for the fact that Athens' economic prospects have deteriorated since.
One banking source close to the talks said the IMF wanted the new bonds' coupon to be lower than the average 4 per cent discussed by Athens and its banks.
''The IMF has been pressing for a lower coupon rate on the new bonds,'' the source said.
Dallara and special adviser Jean Lemierre left Athens on Saturday without finalising the deal, with sources close to the talks saying many details had not been resolved yet, including legal aspects and how a sweetener promised to banks to facilitate the deal would be used.
''We are at a crossroads and I remain quite hopeful,'' Dallara said.
One other key question will be whether the deal attracts a big enough participation rate.
''We are working together with the Greek government, European and global leaders and we can mobilise very very high participation,'' Dallara said.