Greek debt talks resume today with Greek policy makers and the International Institute of Finance, which is negotiating on behalf of private creditors.
Charles Dallara, chief negotiator from IIF returns to Athens today after talks stalled over the weekend due to no agreement reached on the haircut and amount of losses to be taken by the private Greek bond holders.
Euro zone finance ministers made attempts to push talks during the Eurogroup meeting of European finance ministers in Brussels on Monday, where there insisted bondholders take bigger losses on their Greek debt. However, no agreement was reached again.
The clock is ticking for Greece which will run out of funds to pay a €14.5 billion bond redemption due in March . An agreement is needed if Greece is to get the next batch of bailout cash to prevent a debt default.
The Greek government is hoping to complete negotiations on the debt swap by the end of this week. Without a deal, Greece would tumble into a “hard” default that risks setting off turmoil in the financial system.
A major sticking point in the negotiations is the coupon rate. Greece has insisted on a coupon of not more than 3.5 percent but bond holders are asking for a 4 percent coupon on new bonds that Greece will swap out for existing debt.
The bond-swap deal is part of a second bailout agreed by eurozone countries, worth €130 billion ($168 billion) in loans and support for banks.
Under the proposed deal, private creditors would cancel 50 percent of their Greek debt in exchange of a cash payment and new bonds with a longer maturity.