By Yiannis Papadoyiannis
A deal on the private sector involvement plan (PSI+) for the haircut on Greek bonds appears to be closer than ever as both sides - the Greek and European authorities and the banks - have given in on key issues, according to reports.
Sources concur that there is already an agreement, with banks giving ground on the issue of the interest rate, accepting a 4 percent coupon, and the government conceding that the new bonds will have a legal status similar to the loans Athens has received from the eurozone and the International Monetary Fund, i.e. under British law.
Finance Minister Evangelos Venizelos expressed his optimism about an agreement, telling an event organized by the Economic and Social Council of Greece (OKE) that negotiations are on a positive course and a deal is near.
However, he did add that the agreement will be completed only “if our institutional partners respect the October 27 decision that was confirmed on December 9 in the last summit meeting.”
Bank sources told Kathimerini that the efforts to find a solution have intensified in the last few days, emphasizing the absolute need for PSI+ to succeed. If that fails, given the country’s loan requirements in the first quarter of 2012, Greece will find itself at a dead end with unpredictable consequences.
They confirm that there has been significant progress in negotiations, but stress that the creditors’ committee which is conducting the talks on behalf of the private sector does not represent all of the investors concerned, and that there are various approaches to the issue. Yesterday a committee member from Vega Asset Management resigned.
There already are some alternative solutions on the table in case the private sector participation rate is limited. One of these options is the extension of the PSI to other legal entities such as industries and trade companies that hold Greek debt. Another is the forced participation of the minority that wanted to abstain from the PSI through a collective action clause (CAC).
Venizelos hailed the significance of PSI+, saying that it could shave some 100 billion euros off Greece’s debt, amounting to 47 percent of the country’s gross domestic product.