UPDATE 2-No guarantee Greek debt swap will go through-troika source
Reuters - 16/12/2011 14:30:12
* EU/IMF/ECB aim to conclude new bailout talks mid-January
* Aim for voluntary debt swap deal, no guarantee of success
* Discussion ongoing on bankers' creditor status
* Negotiations tense, stormy - source involved in talks
(Addsquotes, Paris talks, details)
By Ingrid Melander
ATHENS, Dec 16 (Reuters) - There is no guarantee talks on the private sector's contribution to Greece's international bailout will lead to a voluntary deal involving the bulk of its creditors, a senior official from the EU and IMF team in Athens said on Friday.
Greece, now in its fourth year of deep recession, is scrambling to put together a new bailout plan with the International Monetary Fund, the European Union and banksthat involves a complex debt-cutting deal before major bond redemptions come due in the first quarter of next year.
Agreement has been held up by wrangling over issues including the credit status and interest coupons on the new bonds to legalguarantees to be offered by the official sector. Another key question is how many would finally sign up to the private sector debt swap.
Failure to secure agreement could force a disorderly default which might in turn trigger a wider emergencyacross the euro zone as it struggles to cope with the escalating sovereign debt crisis.
Asked if there was a risk of a disorderly Greek default, the senior troika official said: "Our objective is still to have a voluntary operation. If you askme: is there a guarantee that there will be a voluntary operation? Of course there can never be a guarantee."
A deal with investors who hold some 206 billion euros of Greek bonds is key to slashing the country's debt mountain, which at around160 percent of gross domestic product is the heaviest in the euro zone.
"The ongoing (debt swap) discussions are constructive, they are useful, but at this point it is too early to say what will be the result," the official, who declined to benamed, told Reuters as the team of inspectors wrapped up a one-week visit to Athens.
The official said the troika - the EU, IMF and European Central Bank - aimed to clinch a deal with Greece on the details of the new bailout during its nextinspection visit in mid-January.
The banks and funds that are part of the steering committee of creditors, the IIF and restructuring advisers are meeting in Paris on Friday after inconclusive two-day talks in Athens earlier this week. Discussions have been tense with stormy exchanges, another source involved in the talks said, adding that the IMF was playing hard ball on any guarantees the official sector will offer,
"(IMF managing director Christine) Lagarde is showing a far more uncompromising face and is very demanding on the guarantees for the private sector," the source said on condition of anonymity.
Greek officials have said repeatedly over the past days that they were optimistic a deal would be clinchedswiftly but work on the deal - albeit partially due to a general rethink on its scale - has been dragging on for months.
"I believe we will make it because I have received positive signs from our consultations and discussions," Finance Minister Evangelos Venizelos told lawmakers on Friday.
PREFERRED CREDITOR?
The Greek government of former central banker Lucas Papademos wants to exchange existing bonds held by banks and other private sector players for a mix of cash andnew bonds under an arrangement that would cut the nominal value of their holdings by 50 percent.
However there are disagreement over details which could significantly affect the real cost to investors.
Charles Dallara, managing director ofthe Institute of International Finance bank lobby that spearheads the talks for banks, said earlier this week that the deal could see banks rank on an equal footing with official euro zone lenders.
The senior troika official said this wasindeed a new element in the discussions but that nothing was agreed on.
"There are different ideas being floated but so far no decisions have been made," the official said, adding that the conditions set in EU summits -- a voluntary deal with a 50 percent haircut to help slash Greece's debt to 120 percent of GDP by 2020 -- were tough because they required very high participation of private bondholders.
"What the discussions focus on right now is to see, given these parameters,can one come up with an offer that would be attractive to private bondholders? And then we will have to see whether there is sufficient response to the Greek authorities' offer."
Creditors are eager to find an agreement sooner rather than laterand have lined up law firms Allen & Overy, White & Case and advisory firm Blackstone (BX.N) to negotiate over the country's debt restructuring, two sources familiar with the situation told Reuters earlier this week.
The plan was to reach a dealby the middle of next week, one source said, and if that didn't work it would come at the end of January at the earliest. (news)
IMF and European officials are associated with the debt swap talks as observers at this stage, the troikaofficial said, but the talks on both strands of the bailout deal - the EU/IMF aid plan and the debt swap deal - will come together early next year as the clock starts ticking on agreement.
Greece says it expects to receive about 90 billion eurosin aid from the EU and the IMF early next year as part of the new bailout, with the cash shared between sweetening the debt swap deal, bank recapitalisation and funds to cover Greece's financing needs.
But the senior official, who declined toconfirm the amount of this aid tranche, warned that Greece should not take it for granted and must first step up reforms.
"The EU member states and the IMF will not be willing to give Greece a huge amount of tens of billions of euros without being convinced that the money is well spent. It is very important that the Greek authorities understand that," the official said.
-30 con un deficit di 3/anno?
