EU's Rehn says Greek debt swap talks in final stages

LONDON Mon Jan 9, 2012 7:31pm GMT

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LONDON (Reuters) - Talks with private investors on a restructuring of Greek sovereign debt are in their final stages and could conclude shortly, the European Union's Economic and Monetary Affairs Commissioner Olli Rehn told Reuters on Monday.

The level of discount to be accepted by creditors was likely to remain in line with the 50 percent level agreed in October, Rehn added, speaking at the end of a meeting of senior European Liberal politicians in London.

"There is no specific date (for when) this should be concluded but of course the sooner the better. We are, to my mind, reaching the final stages of the negotiations and thus the talks could be concluded shortly as regards private sector involvement," he said.

Under the so-called "private sector involvement" (PSI), agreed in October, investors will voluntarily accept a nominal 50 percent discount on their Greek bond holdings in return for a mix of cash and new bonds.

"We stick to the agreement of October. We are currently supporting the negotiations between the Greek government and the international creditors and I don't want to complicate the negotiations by making any exact assumptions or any assumptions on the exact (private) sector rate but it's going to be in line with the October agreement," Rehn added.

At the weekend an adviser to German finance minister Wolfgang Schaeuble said the 50 percent writedown would not be enough to put the country's debt on a viable footing and should be increased.

The PSI deal is a pivotal part of a second, 130 billion euro (107.4 billion pound) bailout package for Greece agreed by euro zone leaders in October.

The latest negotiations between the country, which has total liabilities of more than 350 billion euros, and its creditors are reaching fever pitch as 14.5 billion euros of three-year bonds come due for repayment on March 20, IFR magazine reported.

In order to give at least a month to draft any documents and execute debt swaps, the terms need to be published within the next few weeks.

(Reporting by Tim Castle, Drazen Jorgic; Editing by Kenneth Barry)

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