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Greek PSI: First Deal in the Next Hours? “Not Really” says IIF
Posted by keeptalkinggreece in Economy
A first deal on the PSI is “a matter of hours”a senior member of Greek Finance Ministry has by quoted to have said on Wednesday noon, according to Greek economic news portal Capital.gr. The final notices of exchange and bonds for the new programme is planned to be announced on Sunday, a day before the EUROGROUP meeting on February 6, 2012. Also some international media and news agencies reported more or less the same news.
However the Institute of International Finance dismissed such news as “unfounded”. Speaking to to Proto Thema, an IIF source said:
“The agreement with Greece can not be closed earlier than this weekend, when all difficulties in technical and legal issues have been overcome. These issues are been checked by the joint committee of Greece, the IIF and the EU, which processes the final text of the written agreement. The text of the agreement still needs a lot of work than to be ready within a couple of hours. I wish we had reached the point we want. The deal will be reached this weekend and only if we are ready. Any other information that sees the light of publicity is unfounded. “
On Tuesday, Finance Minister Evangelos Venizelos said that the Greek bond swap deal was ” a formal step away”. However he warned that private investors could suffer a loss of 70% on the net present value of the bonds.
Venizelos said the country’s private sector creditors could take a loss of more than 70 percent of the net present value of their bonds. “We are talking about a greater PSI than originally foreseen in July,” Venizelos told Parliament on Tuesday. “We are talking about a 50 percent cut on the nominal value, and a loss on the net present value (NPV) of more than 70 percent.” (Kathimerini)
Th next big question on the PSI deal is whether the European Central Bank would participate on the Greek bond swap. Dow Jones reported that talks are taken place on this issue. THe ECB and 17 eurozone central banks own 40 billion euro in Greek bonds. The ECB has additionally 73 billion euro in Greek bonds.Venizelos said yesterday, that this decision is up to ECB to decide.
The PSI and the new loan agreement for a second bailout are Greece’s lenders precondition for the next aid tranche of the first bailout, which is due on February. Without this aid Greece would be unable to redeem a bond of 14,4 billion euro that expires on March 20/2012. Greece could officially go bankrupt. (Further reading New Europe)
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