January 30, 2011
Greece is in talks with the European Union and International Monetary Fund on a debt restructuring package aimed at averting a possible sovereign default.
The proposal would enable Athens to borrow up to €50bn ($68bn) from the eurozone’s bail-out fund, the European financial stability facility (EFSF), to buy back bonds at about 75 per cent of face value. At the same time the maturity of Greece’s €110bn rescue loan from the EU and IMF would be extended to 30 years and the interest rate reduced below the current 5.5 per cent, according to bankers with knowledge of the talks.
“Formal contacts on the package are under way but they’re at an early stage,” one banker said at the weekend. However, such a deal, particularly the EFSF loan and the extension of the payment schedule, would need approval from eurozone heads of state, and there are signs Germany is against such uses of the EFSF.