Greek default fears resurface as bondholder talks collapse

Talks between Greece and private sector bondholders have collapsed, with the two parties failing to reach agreement over the country’s debt restructuring.

The Institute for International Finance, which represents banks and other private bondholders of Greek debt, said on Friday it has stopped talks and is reconsidering the benefits of the ‘voluntary’ restructuring approach agreed last October.

The eurozone and the IIF had agreed to a 50% voluntary haircut in privately held Greek debt, worth €103bn, with Greece receiving a second bailout worth up to €130bn in return.

But the IIF said negotiations over the bond swap have now been “paused”. A Greek official told Bloomberg the talks will resume on Wednesday, however.

“Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward […] has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt and the 26/27 October agreement,” the IIF said in a statement.

“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.

“We very much hope, however, that Greece, with the support of the euro area, will be in a position to re-engage constructively with the private sector with a view to finalising a mutually acceptable agreement.”


This article first appeared on Investment Week

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