The proposal that the IIF originally proposed was for an average rate of 4.25 percent -- 3 percent for bonds maturing by 2014, 4 percent for bonds up to 2021 and 4.5 percent after 2022. The IIF also wants a rate surplus in the case of future growth in the Greek economy. The haircut will be a nominal 50 percent, as agreed at the eurozone summit in October, but its impact on the bonds’ net present value will range between 64.5 percent and 69.5 percent, depending on the discount rate to be used. The new bonds will have a 30-year maturity period, while there will be a 10-year grace period during which bondholders will only receive interest and after which Greece will pay both interest and capital.
For every 100 euros of current debt, bondholders will receive 35 euros in 30-year paper that will be under the same status (British law) as the bonds issued by the European Financial Stability Facility (EFSF), and 15 euros in two-year bonds from the EFSF, instead of the original plan for cash payment. Talks are set to continue over the weekend and into next week, as a deal needs to be reached as soon as possible.