Ongoing talks on Greek debt

Greek debt talks on knife-edge amid growing IMF pressure on bondholders

Hopes dwindle of deal in time for eurozone meeting after German insistence that investors agree to lower interest rates

The Guardian,

22 January, 2012

Hopes of a debt deal between Greece and its private creditors in time for Monday's eurozone meeting have been dashed, amid increased pressure on bondholders to accept bigger losses.

After being close to a breakthrough, the high-stakes talks – aimed at averting a Greek default by slashing the country's monumental debt load – were set back when the International Monetary Fund and Germany insisted that investors agree to reduced interest rates on new bonds.

"It has created a new set of problems," said an official, who added that the demand for lower rates reflected growing scepticism over the sustainability of Greece's debt, even if 50% is written off as initially agreed when the European Union and IMF announced a second package of rescue funds for Athens last October.

"Negotiations have been conducted by phone over the weekend and have been very intense," said the official. "Greece will set out its case at the Eurogroup [of finance ministers]. Our hope is that the differences can be bridged and there can be more solid common ground."

Well-placed sources described the delay as "putting a brake" on a deal that was virtually in place. Private government debt holders, including banks, insurers and hedge funds, had reportedly reached an agreement on interest rates averaging 4% before official creditors including the IMF and the European Central Bank called for yields to be no higher than 3.5%, citing the deteriorating Greek economic outlook.

For article GO HERE