Some common ground in haircut negotiations?

Greece wants to move fast in bailout talks with the EU, IMF and bankers, Finance Minister Evangelos Venizelos said on Monday, reaffirming the aim of clinching a voluntary debt restructuring deal by end-January before the country heads to elections.

“We will proceed smoothly and with the maximum possible speed,» Venizelos said after separate meetings with the head of bank lobby IIF, Charles Dallara, and with EU, IMF and ECB inspectors, on key aspects of a 130 billion euro bailout plan.

Banks represented by the Institute of International Finance (IIF) agreed in October to write down the notional value of their Greek bond holdings by 50 percent in exchange for new paper, as part of the latest rescue plan for the country whose chaotic finances lay at the origin of the euro zone debt crisis.

The writedown will help to reduce Greece’s debt ratio to 120 percent of GDP by 2020 from over 160 percent this year. But main elements of the plan such as the coupon and discount rate, which determine the cost for banks, are still being discussed.

Some progress was made on Monday, a banking source involved in the talks told Reuters, with discussions revolving around a lower coupon rate for the Greek government and smaller losses for investors.

“Some common ground is forming in principle on finding a structure that will boost the quality of the new bonds — for the final NPV (net present value) loss to be smaller, and for the state to not have to pay a high coupon, but there is still a way to go,» the source said.

NPV is a measure of the current worth of the bonds’ future cash flows.

The talks with bankers will continue on Tuesday, while the meetings with the EU, IMF and ECB officials — dubbed the troika — are scheduled to wrap up by the end of the week before resuming in January.

“The talks are critical and difficult. The country is being asked to take important and crucial decision and there is no room for us to be distracted,» Venizelos said, warning that the caretaker coalition government, put in place at the end of November to stem a deep political crisis, needed to stay in place until the new bailout was agreed on.

General elections have been pencilled in for Feb.19, just a few weeks after the end-January date by which the country hopes to wrap up talks.

“The country cannot afford to be dragged into a pre-election period while we still need to wrap up these procedures,» Venizelos told a news conference.

He also said Athens was days away from a deal with Switzerland to curb tax evasion. A Swiss government official clarified that the deal would simply be about opening formal negotiations.

Venizelos — who has been leading talks with both the troika and banks since the summer — told the news conference the tough talks were taking their toll on him.

“I’m not just tired, I’m exhausted,» he said.


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