Default is looming for Greece

GREECE is under pressure to strike a deal with its private debt-holders or face default and a possible exit from the Eurozone.

The International Institute for Finance (IIF), which represents investors in Greek sovereign bonds, will return to Athens on Wednesday to thrash out a deal after talks collapsed last Friday.

Athens has until March, when €14.4bn (£11.9bn) worth of its bonds are due, to negotiate and restructure the debts owed to private investors.

The German foreign minister, Guido Westerwelle, flew to Athens yesterday in an attempt to intervene in negotiations, in which Greece had been unable to agree on the interest rate it would pay investors for swapping their bonds for new certificates worth half of the original value.

Westerwelle said of the negotiations: “Discussions are difficult but with good faith they will reach a good result.”

Eurozone leaders will meet in a week’s time in part to discuss Greece’s progress in delivering on the reforms, and spending cuts necessary to release its new bailout funds, worth €130bn.

If Athens cannot agree a deal with private investors by then, the country will face questions as to how its debts will get onto a sustainable footing.