By Aaron Kirchfeld and Maria Petrakis
Greece?s private creditors plan to meet in Paris on Thursday to discuss a debt-swap deal that?s contingent on the country securing a second aid package from European and international officials, two people familiar with the plan said.
The Institute of International Finance is holding the meeting to go over technical matters so that if an accord between Greece and the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, is reached, the debt swap could be implemented quickly, said the people, who declined to be identified because talks are private.
Private creditors are still prepared to accept an average coupon as low as 3.6 percent on new 30-year bonds in the exchange, said one of the people, who declined to be identified. While the framework of the swap and many of the details have been agreed upon, the deal can?t be completed until the government agrees on the terms with domestic political parties and the Troika on the second financing package, the person said.
Greek Prime Minister Lucas Papademos is set to meet with leaders of the political parties supporting his caretaker government on Wednesday in Athens after delays plagued negotiations over the terms required for a 130 billion-euro ($172 billion) rescue package from international creditors. The government is struggling to arrange financing to avert a collapse of the economy, risking a new round of contagion in the euro area.
With the country facing a 14.5 billion-euro bond payment on March 20, German Chancellor Angela Merkel warned this week that ?time is running out? to reach an accord.
The debt-swap deal with private bondholders, a critical element of the second rescue package, would slice 100 billion euros off more than 200 billion euros of privately-held debt. The rescue blueprint includes a net present value loss of 70 percent or more for bondholders in the voluntary debt exchange as well as loans that will probably exceed the 130 billion euros now on the table.
Even if a deal is reached, a question remains over how many of Greece?s private creditors will take part in the debt swap.
Papademos and Finance Minister Evangelos Venizelos had ?constructive discussions? yesterday with Charles Dallara and Jean Lemierre, co-heads of the steering committee leading talks on behalf of creditors, and Deutsche Bank AG Chief Executive Officer Josef Ackermann, the IIF said in a statement. Dallara is managing director and Ackermann chairman of the Washington-based IIF, an industry group representing more than 450 financial firms.
They discussed the private-industry involvement and the program that Greece is negotiating with the Troika. The IIF representatives are going to Paris on Wednesday to continue consultations with investors and creditors, the statement said.
The creditors? steering committee negotiating the debt swap includes representatives from banks and insurers with the largest holdings of Greek government bonds, including National Bank of Greece SA, BNP Paribas SA, Commerzbank AG, Deutsche Bank AG, Intesa Sanpaolo SpA, ING Groep NV, Allianz SE and Axa SA.
Financial firms on the IIF?s private-creditor investor committee, a larger group of 32 members that includes the smaller steering committee, hold more than 47 billion euros in Greek sovereign debt, according to data compiled by Bloomberg from company reports.