PSI deal just a 'formal step' away

A deal on the private sector involvement (PSI+) in the Greek debt swap plan is just a “formal step away” and should be completed as soon as possible, Finance Minister Evangelos Venizelos said in Athens on Tuesday, warning that it can only be implemented if Greek social security funds participate as well. 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.” Asked at a press conference whether the European central bank would participate in the debt swap, Venizelos responded that it is up to the ECB to decide, but added that “on Eurogroup and Euro Working Group level all possible scenarios have been recorded and examined,” in reference to the councils of the eurozone’s finance ministers and of ministry representatives respectively. The minister added that the Eurogroup will convene again on Monday to discuss the Greek issue. Venizelos also warned that unless the social security funds participate in the haircut of the debt, the country will default. Addressing a parliamentary committee the finance chief stressed that the debt swap, for which a public offer must be made by February 13, can only proceed after a deal on the loan package to Greece is reached. “Time is of the essence,” he said, going on to explain that Parliament will need to approve the terms the terms of the exchange and the issuance of the new bonds by February 13. A senior Greek banker, meanwhile, told Reuters on Tuesday that a final accord on the bond swap was on hold until Athens can show it is serious about tackling reforms. “The debt swap agreement is ready, but it will not be announced before the end of the week and until the government has made certain commitments on reforms, labor issues and the pension system,” said the banker, who declined to be named. “By delaying the debt swap, European partners are putting pressure on the government and political leaders to make certain commitments,” he added.

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