THE PROSPECT of a deal with Greece’s private debtholders grew more remote yesterday as the head of the group representing its creditors accused Eurozone officials of making “unreasonable” demands.
Greek and Portuguese debt markets were spooked by the news, although a healthy French debt issue helped other markets hold steady.
Charles Dallara, head of the International Institute for Finance (IIF), which is representing banks and other creditors, said: “They [the Eurozone] want the private sector to accept interest rates that they would not accept, which is unreasonable.”
The IIF said that Dallara might not return to Athens tomorrow, as scheduled, if he does not get sufficient “clarifications” from Brussels to get interest rates “in a range that will enable a major majority of private bondholders to enter a voluntary agreement”.
Without a deal soon, Greece faces the prospect of a default in March, when €14.4bn (£11.9bn) of its bonds will mature. But it will need time after agreeing the deal to draw up the paperwork and make bond swap offers to all of its private creditors.
Yields on ten-year Portuguese debt jumped 1.952 percentage points to 14.409 per cent, as worries spread from the Greek negotiations.
Meanwhile, France sold €8.6bn in short-term debt at relatively low interest rates, despite Friday’s credit rating cut, calming markets. Successful Dutch and Slovakian debt auctions also helped buoy markets.