Talks on the implementation of the plan for private sector involvement in the Greek debt swap (PSI+) are believed to be in the final straight and all signs suggest they will wrap up in the next few days.
Bank sources believe that the agreement will provide for a haircut of 50 percent on old Greek bonds, as agreed at the eurozone summit on October 27, while the impact on the lenders? net present value will be up to (but not exceed) 60 percent.
The same sources affirm that the coupon on the new bonds will be 5 percent while the new debt will enjoy the same legal status as that of the loans Greece receives from the eurozone and the International Monetary Fund, i.e. according to British law.
Bank officials stress that a deal is near and forecast a successful conclusion to PSI+.
Private holders of Greek bonds, mainly banks and institutional portfolios, have intensified their efforts to reach an agreement as they realize that time is not on their side (or Greece?s side for that matter). If PSI is not completed quickly and Greece does not manage to get the new bailout package, then creditors are risking not just 60 percent but the whole of their capital loaned out to Greece.
Economist Gikas Hardouvelis, a financial adviser to Prime Minister Lucas Papademos, told Skai Radio on Thursday that bondholders are aiming for a swift conclusion so as not to lose their money.
There is also orchestrated pressure coming from the eurozone and the IMF as they acknowledge the risks that the deterioration of financial conditions in general (and the banking sector in particular) entails.
Meanwhile Brussels issued a note warning Greece that there may be a fresh revision to its loan disbursement schedule. European Commission spokesman Olivier Bailly tried to apply more pressure, stating that ?if our mission in mid-January reaches the conclusion that there are delays, then we should revise the March installment.?
Due to the delay in the disbursement of the sixth installment of loans to Greece from September to December, the seventh tranche has already been moved to March.