The feverish negotiations on the private sector involvement plan (PSI+) for the Greek debt swap are set to continue on Friday, but reports suggest that, under great pressure to conclude their talks, the parties involved are very close to striking a deal.
Finance Minister Evangelos Venizelos told Parliament on Thursday that on Friday, probably by noon, the technical details of the agreement are expected to have been decided so that by Monday, when the Eurogroup council of eurozone finance ministers meets, the deal will have been completed.
?On Monday, January 30, at the European Union summit,? said Venizelos, ?we must have definitive plans for the new loan program, too, not just PSI+.?
Late on Thursday Venizelos and Prime Minister Lucas Papademos met again with the head of the Institute of International Finance (IIF), Charles Dallara, for the completion of the agreement.
Sources said Dallara discussed his new proposal that provides for an average interest rate of 4.25 percent for the new bonds Greece will issue to replace the old ones, leading to 68 percent losses in net present value terms for bondholders.
The IIF proposed a coupon of 3 percent for bonds maturing until 2014, 4 percent from 2015 to 2020, and 4.5 percent for after 2020. For the latter, the proposal includes a rate surplus based on the country?s growth rate. Bondholders are also asking for European Union guarantees for the new bonds.
Before his meeting with Venizelos and Papademos, Dallara told journalists that he hoped the negotiations would quickly lead to an agreement.
Bank officials noted that there have been some substantial and in-depth negotiations in the last few days, and expressed their optimism for an agreement. However, they added that for a deal to be reached, the International Monetary Fund and the eurozone, and Germany in particular, will have to accept interest rates that can support the voluntary character of the agreement.
The IMF, sources say, is firmly insisting that the new bonds? rate not exceed 3 percent, so that the haircut can lead to a substantial lightening of the debt load for Greece.