Business, Finance & Economics

Greek debt talks resume


Demonstrators protesting austerity measures march in front of the parliament building during a rally in Athens, Greece, on Dec. 1, 2011.


Milos Bicanski

Talks between the Greek government and its private creditors resumed today after breaking off on Jan. 13, BBC News reported.

More from GlobalPost: Greek debt talks halted for 'reflection'

According to the Associated Press:

The so-called private sector involvement, or PSI, deal is meant to write off half of the debt Greece owes private bondholders. Creditors would get most of the remaining debt in new bonds with extended repayment periods, as well as a cash payment.

Greece needs a deal to qualify for another installment of bailout funds, BBC News reported. And it needs the bailout loans to make its next payment on its debt – 14.4 billion euro, which is due in March.

A group of 32 private creditors are negotiating this “consensual restructuring,” Bloomberg Businessweek reported. Charles Dallara, managing director of the Institute of International Finance, a global association of financial institutions, and Jean Lemierre, a special adviser to the chairman of BNP Paribas SA, are leading the negotiations for the creditors, according to Bloomberg Businessweek.

Greece and its creditors have yet to agree on interest rates for the new bonds, the AP reported.

“The interest rate on the new loans is a key issue here,” Dallara told CNN before negotiations today, according to the AP. “Some seem to have a view that we should actually extend the loans at interest rates even lower than what the IMF and (the Europeans) extend their loans at, and there’s not much logic in that in our viewpoint.”

The new bonds will probably pay annual interest of 4 percent to 5 percent and have a maturity of 20 years to 30 years, Bruce Richards, chief executive officer of New York-based Marathon Asset Management LP, told Bloomberg Businessweek. Marathon is part of the group of private creditors negotiating with Greece, but not the steering committee directly involved in the talks. Richards told Bloomberg Businessweek that he estimates the net present value of the deal for the bondholders will be about 32 cents on the euro.

“We want this (deal) to happen in a way that is safe for Greece — with Greece in the eurozone — and safe for the real economy and the financial system,” Greek Finance Minister Evangelos Venizelos told Parliament today, according to the AP.

Venizelos said it was possible that Greece would reach a deal with the private creditors by the end of the week, BBC News reported.