The talks between Greece and the chief of Institute of International Finance Charles Dallara on the Greek Bond Swap (PSI) have been suspended and no solution was found. Despite some positive signs on the PSI progress during the day, Charles Dallara said on Friday afternoon in a statement” We hope Greece will renegotiate with the private sector with the aim to conclude a mutual voluntary agreement on the debt”.
Talks to restructure Greek privately-held debt didn΄t reach a conclusion Friday and are suspended, the chief negotiators representing the private-sector bondholders said.
According to Dow Jones Newswires, a statement by Charles Dallara of the Institute of International Finance and Jean Lemierre of BNP Paribas SA (BNP.FR), who head the talks for the private sector, said that “unfortunately, despite the efforts of Greece΄s leadership, the proposal put forward…has not produced a constructive consolidated response by all parties”.
The two men have been in Athens since Thursday to meet with Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos.
The negotiations had been expected to reach a conclusion next week, but according to the Dallara-Lemierre statement the talks will have to pause.
“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,” the statement said, referring to the principle that the restructuring of the privately-held Greek debt would be done on a voluntary basis (Capital.gr)
Thank God, Dallara’s statement came at the time the Athens Stock Exchange was closing for the weekend so the General Index managed to maintain its wins of +2.02%.
Greek media report of disagreement on key issues like the interest rate and the duration of the bonds. Bankers speak of “unresolved key issues”, while stressing that time is running out.
The Greek Bonds Swap talks deal with a 50% “haircut” of Greek state bonds amounting to €206 billion and exchange of new securities to 35% of the nominal value, while 15% will be paid in cash.
So with this change, banks can choose between 20-year bonds with interest at 4% or 30-year bonds at 5%.
The bankers, however, reportedly prefer the second option as being more consistent with the development of the Greek economy.However, some bondholders will not accept voluntary haircut on their investments. “This could lead to technical default under secret rules governing financial markets. That could lead to the result that European officials are trying to avoid, “the newspaper writes. (news portal Zougla.gr)
