A source from the Institute of International Finance (IIF) has today categorically denied that there should be any reason forĀ optimism as expressed yesterday by Greece’s Finance Minister, Evangelos Venizelos, over a framework deal between the Greek government and creditor banks to halve the public debt owned by private investors as part of the country’s second bailout plan. The news was reported by the private radio and television network Skai.
Last night, Venizelos said that the deal between the Athenian government and creditor banks would be concluded shortly.
Today, however, the IIF source quoted by Skai denied that there should be any “space for optimism of the sort. Everything is still up in the air, from the result of the talks to the percentage of private participants in the programme”. Skai suggests that, given the current international economic situation, the only certainty is that new Greek government bonds will be subordinated to English rather than Greek law, as was the case with the current bonds, and as imposed by the IIF at the European summit of October 26.
Greece’s second bailout (worth 130 billion euros) will see the involvement of private individuals, who will have to accept a 50% reduction in the nominal value of credits through a swap of old bonds held by Greek banks in exchange for new ones. The plan aims to reduce Greek debt from 160% of GDP to 120% by the year 2020. Thirty of the 130 billion euros in the bailout plan are aimed at recapitalizing Greek banks, which alone hold almost 50 billion euros of Athens’ debt.
(source: ANSA)
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