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Greece hopes for debt swap deal by end of week

ATHENS - Greece is aiming to complete negotiations on its debt swap deal by the end of the week, the government’s spokesman said yesterday, adding that the talks were at their “most delicate phase.’’

Charles Dallara, head of the Institute of International Finance - the body representing banks and other investment firms that hold a large part of Greece’s debt - will head back to Athens today for the negotiations on a bond swap.

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“The target is to conclude’’ the accord within the week, government spokesman Pantelis Kapsis told reporters in Athens.

On the front line of Europe’s sovereign debt crisis, Athens is trying to get its private creditors to swap their Greek government bonds for new ones with half their face value, thereby slicing some $130 billion off its debt. The new bonds would also push the repayment deadlines 20 to 30 years into the future.

However, the main stumbling block over the past few weeks to securing this deal has been the interest rate these new lower-value, longer-term bonds would carry. A high interest rate could buffer losses for investors, but would also require the eurozone and the International Monetary Fund to put up more than the $169 billion in rescue loans they promised in October.

The swap is crucial to bring Greece’s debt back to a sustainable level. The eurozone and IMF say a higher interest rate would prevent Greece’s debt from falling to 120 percent of gross domestic product by 2020.

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