Haircut talks to resume next week, Greece mulls CACs

The head of the Institute of International Finance (IIF) Charles Dallara has concluded his second day of meetings with Greek officials as they attempt to conclude a deal that will see private investors accept a haircut on Greek debt. The talks are due to resume next week.

Dallara is due to meet with Finance Minister Evangelos Venizelos and Prime Minister Lucas Papademos for a third time next week, possibly on Wednesday.

“We will most likely resume talks next Wednesday,» Venizelos told reporters after meeting Dallara for a second day in a row.

“We must process more issues,» Venizelos said.

Dallara left the meeting without making any statement. The IIF warned on Thursday that time was running short to reach a deal.

Amid reports of some hedge funds that own Greek debt planning to hold out, government spokesman Pantelis Kapsis confirmed that Greece is set to introduce collective action clauses (CACs) into Greek bond contracts as a way of ensuring 100 percent participation in the debt restructuring.

“I don’t think it will be today. But that such a change will be introduced, that is true,» Kapsis said. «We will take a look at the final agreement and at that point we will comment.”

A deal must be struck well before the March 20 bond redemption of 14.5 billion euros, because the paperwork alone will take at least six weeks.

EU, IMF and ECB inspectors, who arrive in Athens on Tuesday for talks on a new, 130-billion-euro rescue plan for Greece, also want to see an agreement on the debt swap before they agree on the bailout.

Any agreement with private bondholders on debt reduction should be in line with the terms decided by euro zone leaders on October 26, the EU Commission said on Friday.

Under the terms agreed in October, Greek privately held debt would be reduced by half, so that, together with structural reforms, the overall debt to GDP ratio of Greece would fall to a sustainable 120 pct in 2020 from 160 percent now.

[Kathimerini English Edition

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