Τhe head of the Institute of International Finance (IIF) Charles Dallara is due to meet with Greek officials for the second day in a row on Friday as they attempt to thrash out a deal that will see private investors accept a haircut on Greek debt. Dallara met with Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos on Thursday and will hold talks with them again on Friday as the negotiations are reaching a crucial point. A senior Finance Ministry official said the outline of the deal may be ready in the next few days. “We are totally on track and exploiting the momentum.
By the end of next week, we could have the final outline for a deal with the private sector. By the beginning of February we may have the formal public offer,” the unidentified official told journalists. The IIF, which represents the majority of private holders of Greek debt, issued a statement on Thursday, saying: “A range of issues were discussed and some key areas remain unresolved. Discussions will continue in Athens, but time for reaching an agreement is running short.”
With the maturity period and the interest rate of the new bonds still being negotiated and the rate of participation by private bondholders still uncertain, the outcome of the talks remains unknown. Dallara is said to have asked for a coupon of more than 5 percent. Observers have not ruled out the possibility of forced participation that would trigger the payout of credit default swaps. Ta Nea newspaper reported on Friday, without quoting any sources, that the Greek government will submit a law to parliament by Monday that could force reluctant creditors to sign up to the bond swap Three senior eurozone sources told Reuters on Thursday that Athens was considering such a move.
The coalition government has a strong majority in parliament, which means the law could be voted easily.