Greece, IMF expect debt deals soon

Investors in the deal will face a loss on their bondholdings of at least 70 percent, said Finance Minister Evangelos Venizelos.

ATHENS - Greece and the International Monetary Fund said yesterday that negotiations for landmark debt deals will be concluded in a “matter of days,’’ raising hopes that the country will dodge a disastrous default this spring.

Greece is locked in two sets of talks, one with private creditors to have them take losses on their bondholdings and the other with its international bailout rescuers to receive new loans. “We are at a crucial point in developments. In the coming days, the agreements must be completed’’ for the bond swap and a second $171 billion bailout package, government spokesman Pantelis Kapsis said.

Debt inspectors from the European Commission, European Central Bank, and the International Monetary Fund, known as the troika, are in Athens for talks on the second rescue package, which is tied to an agreement with private creditors to accept losses on Greek bonds they hold. The success of the bond deal, however, also depends on the outcome of the bailout talks.


The bond swap, known as the Private Sector Involvement, or PSI, will see private creditors swap the bonds they hold with new ones worth half their original face value, longer repayment times and lower interest rates. They will also get a $40 billion cash sweetener - to be taken from the $171 billion bailout - for accepting the deal. Once secured, the PSI will cut $132 billion off Greece’s national debt.

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Overall, the investors participating in the deal will face a loss on their holdings of more than 70 percent, Finance Minister Evangelos Venizelos said in a Parliament committee meeting Tuesday night. The official offering of the new bonds will come by Feb. 13, Venizelos said.

“Constructive discussions continue on the voluntary debt exchange as other matters move forward,’’ the Institute of International Finance, a bank lobby that is representing private bondholders in the negotiations, said in a statement yesterday. “We hope that the various elements of the Greek package will come together in the days ahead.’’

Greece is running out of time, as it faces a $19 billion bond redemption on March 20 that it cannot afford to pay without additional help. A default would spell disaster for the country and destabilize European and global markets. Both deals will need the agreement of the heads of the three political parties in Greece’s interim coalition, Kapsis said.