ECONOMY

Greece expects details for bond swap in Jan.

Negotiations with banks for a massive bond swap deal are «going well» and a framework agreement is expected in early January, an official in Greece’s coalition government said on Tuesday.

The official, speaking on condition of anonymity because the talks are ongoing, said it was likely the outline of the deal will be settled early in January. Specific terms, including the participation rate of the banks involved, will be worked out later that month.

Banks and other private holders of Greek debt are negotiating a 50 percent writedown on the bonds. Their bonds will be replaced by new ones backed by a new European rescue fund.

The bond swap is a key part of the second bailout out deal for Greece. The struggling country remains frozen out of private bond markets and has remained solvent since May 2010 thanks to rescue loans totaling 110 billion euros ($143 billion) from European Union countries and the International Monetary Fund.

Despite caution from EU officials, Greek officials insist Europe-wide turmoil in debt markets will not affect the crisis-hit country’s negotiations.

Greece’s coalition government, backed by the majority Socialists and main rival conservatives, was formed last month to push through a series of long-delayed reforms demanded by rescue creditors in return for a second bailout. They include a shake up of the tax system, judicial reform to reduce trial delays, and implementation of new market rules opening up traditionally restricted professions to more competition.

Officials in the new government have conceded that a tentative February 19 date for general elections is likely to be delayed to sometime in the spring, given the number of reforms requiring parliamentary approval. [The Associated Press]